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Small cars, big expectations

Small cars, big expectations
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First Published: Mon, Jan 11 2010. 09 24 PM IST
Updated: Mon, Jan 11 2010. 09 24 PM IST
The popularity of small cars at the 10th Auto Expo is evidence of the Indian car market’s growing clout in the global automobile industry. India, along with China, will play a large part in how the world perceives, makes and drives cars in the future, and the wheels are already in motion.
Car sales in India and China clocked significant growth in 2009 even as the US auto market—one of the largest in the world—teetered on the verge of collapse. With the Indian car market expected to double to three million by 2015, that growth is likely to continue, and much of it will be driven by small cars.
There are three reasons for this. The energy efficiency value of small cars means they will be preferred over large, fuel-guzzling vehicles that the US auto industry, for instance, has thrived on in the past. This is more so in a world where fuel prices are likely to go up, not down. And despite worldwide talk about emissions reduction and green fuel, a definitive shift to alternative energy vehicles is still some way off.
Secondly, as the Indian economy grows and more money comes into the hands of people, first-time buyers, especially the young middle class, will be attracted to small cars by their affordability as well as stylish appeal. In India’s uniquely price-sensitive auto market, small cars already account for around 70% of sales, and this number will grow.
A third reason is the concept of the small car itself. For the first time, after Tata Motors’ Nano, the world’s major auto companies are subscribing to the Indian perception of a small car, and the less-than-1,200cc-and-4m vehicle is becoming the global standard for the segment. The Nano in many ways contributed to this shift, with a number of other car makers racing to plug the small-car hole in their inventories and generate alternatives to Tata’s product.
The consequent surge in the number of auto makers setting up manufacturing and export facilities in India has the potential to create industrial jobs in a country that desperately needs them, and translates into increased affordability for the people and more choices for consumers. This is one cycle India and the global auto industry can hugely benefit from.
Does the future of the auto industry lie in India? Tell us at views@livemint.com
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First Published: Mon, Jan 11 2010. 09 24 PM IST
More Topics: Ourviews | Delhi Auto Expo | China | Tata Nano | Views |