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India ahead of China in auto sales growth

autos Updated: Apr 14, 2011 02:27 IST
Sumant Banerji

India has emerged the fastest-growing car market in 2010-11, thanks to a relentless spurt in demand in the domestic market and an unprecedented slowdown in growth in China.

The Indian car market grew by over 29% during the year, with record sales in the first three months this year, while China saw its slowest quarterly growth in two years in the same period.

The dragon nation still managed to grow by a healthy 25% during the fiscal but this was significantly off the 40% pace it set in the previous fiscal.

The world’s number 2 market, the US, saw sales rebound to a near-14% growth while Europe’s largest car market Germany saw a shock decline. Expectations of a relative slowdown in India have been offset, and the growth engine seems set to chug along.

“We have been setting rather conservative targets but have been pleasantly surprised by the growth last year,” said Sugato Sen, senior director, Society of Indian Automobile Manufacturers (SIAM). “The target was revised upwards quite a few times during the year and even then growth exceeded it by the end of the year. This year we expect a growth of 16-18% but will not be surprised if a similar thing happens again.”

China and India have been at the forefront of the automobile industry since the 2008 recession spooked developed markets like Europe, Japan and the US. While there continues to be a great deal of uncertainty all around, the Indian story is only getting stronger.

“Coming after a more than 20% growth in the previous fiscal, it is commendable to achieve this growth,” said Mayank Pareek, managing executive officer (marketing and sales), Maruti Suzuki India Ltd. “However I am not surprised, and expect the car market to be atleast 4.5 million to 5.5 million unit strong by 2015.”

In China on the other hand there is a sense of pessimism with some even predicting a decline this year, a rarity in recent history. The impact of withdrawal of low tax rates for cars and introduction of licensing by Beijing Municipal government to restrict sales, is already being felt.

“In the short term, industry may go into reverse gear,” said Rao Da, head, China Passenger Car Association, a quasi official body.