The Financial Express Posted online: Thursday, December 01, 2005 at 1327 hours IST
New Delhi, December 1: At a time when auto industry honchos in India refuse to predict even the next quarter's growth, US-based consultancy Keystone-a subsidiary of LaSalle Consulting Associates-has forecast that India will become the world's third largest automobile market by 2030, behind just China and the US.
An ageing population and increasing costs of ownership will see auto market shrinking in Japan, Korea and Europe while increasing per capita income will fuel the two Asian giants' growth, it says.
Over the next quarter century, emerging markets will replace the mature markets of America, Europe and Japan as the primary driver of sales growth and will account for 69% of industry sales and 87% of vehicle registrations. Over the next 25 years, more motor vehicles will be sold than in the entire history of the industry, the report says.
The projected size for China is 62 million and for US 23 million. The size of the Indian vehicle market is forecast to cross 20 million (assuming a consistent GDP growth rate of 6%) from the one million plus vehicles sold in 2004. This amounts to a compounded annual growth rate (CAGR) of over 12%. The next two countries in the pecking order would be Brazil and Japan, whose sales are projected to be in single digit millions. Currently, the top five motor vehicle markets are the US, Japan, China, Germany and the UK.
In 2017, China is projected to become the world largest market for motor vehicle sales, surpassing the United States. Around the same time, India's auto market, too, is projected to surpass Japan. In terms of vehicle ownership per thousand population, developed countries would have vehicle ownership propensity of well over 600 vehicles per thousand. India and China, which are at believed to be at 8 and 14 respectively, will see substantial increases in their ownership rates. Within the next quarter century, China is projected to reach an ownership rate of close to 380 and India around 140 per thousand.
The survey has been done by analysing and estimating key economic parameters and determinants of vehicle sales across the world's top 30 motor vehicle markets. These variables include GDP, per capita income, population growth, vehicle ownership propensity and the associated income elasticity.
The study has also assumed a secular long-term growth forecast in oil prices saying that the cycles in oil prices, which could have an impact on sales, will play themselves out over the 25-year period.
