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Buoyed by the boom witnessed in 2010-11, the passenger vehicle segment is expected to touch the three million unit sales milestone in the current fiscal. This is a year ahead of the industry's original target of 2012-13.
According to top industry sources, passenger vehicle sales in 2010-11 have come as a welcome surprise after breaching the two million unit figure by a large margin. In the fiscal about 2.52 million passenger cars and utility vehicles were sold in the country, about 29 per cent growth over the 1.95 million unit sales recorded in 2009-10.
“If we take an optimistic view, we should meet the three million unit sales target in 2011-12. Though we have a modest view on the growth this year, like last fiscal, we may get totally surprised by the growth again. The previous target for three million units in a year was 2012-13,” said an industry official.
An official from one the top carmakers in the country added, “It has been a very good year for the carmakers … many companies are now facing higher demand than they can cater to.
“The next year should see growth in the 15-17 per cent range. Although incomes are growing, challenges like rising commodity prices and interest rates may lead to increase in vehicle prices and a drop in sales.”
If the three million target is achieved this fiscal, the passenger vehicle market would have doubled in just three years from 2008-09 when sales stood at 1.51 million units. In fact, the growth can be judged from the fact that market leader Maruti Suzuki sold the same number of cars in the last six years (five million) than it did in the first 22 years since inception.
This growth spurt, coming as it did after the slump of 2009-10 and the global financial crisis, has also left many players strapped for capacity. Maruti Suzuki and rival South Korean carmaker Hyundai are now both trying various measures so as to not lose customers to the new competition that has come in.
Maruti Suzuki, which already has production capacity of about 1.4 million units, in two separate announcements last year, said it would increase capacity by five million by 2012 at a cost of Rs 3,625 crore. Hyundai, which used to export almost half of its production, has chosen to allocate more capacity for the domestic markets. It is also setting up a new diesel engine plant.
“Though many new players have entered the market, not much is expected to change in terms of the split in market share. Ford and General Motors have made strong gains, but Maruti Suzuki, Hyundai and Tata Motors will maintain their dominant position,” said the industry official.
All of the 10 major global auto majors now have significant and long-term investments in India – with French automaker PSA Peugeot Citroen being the last to enter. Moreover, six of the ten OEMs have also set up product development centres in the country. In terms of car production, India ranks seventh in the world at 2.81 million units in 2010, though is ready to pip Brazil (2.82 million units) for the sixth spot.
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