INTRODUCTION TheIndian passenger-car industry has been on the continuous growth trajectory inthe recent past aided by different contributing factors of national developmentnamely robust economic activity, increased environmental regulations, emergingorganized retail industry, government’s increased focus on rural development,and development of infrastructure including roads supported by availability offunds for new projects as well as for easy vehicle financing for prospectivebuyers. The industry seems to be breaking out of its conventional cyclicaltrends and of the different size of cars. The small car segment has exhibitedrobust growth in production and sales over the last few years. The small-car segment hadalways been the high growth segment of the Indian automobile market right fromthe very first launching of the small-car in the Indian market by MahindraCompany in 1947. The multiplied growth of the same today, in many ways,reflects the psychographics and demographics of the car purchasing populationin India. As such, for many years, small cars have accounted for a major partof the revenue of the fast expanding passenger-car market. But the best thingabout the demand for small cars is that there are upgrades possible even inthis segment – attending to the mature levels that the Indian car industry hasreached.
Further, Indian consumers now want the latest technological andfunctional features in such cars and are not ready to wait for long to get thelatest models from foreign car manufacturer as they did in the past. Now thereare enough loc and multinational players in the Indian market. There has beensignificant relation to foreign players resulting in growth promotion. Theeight-percentage point cut in excise duty has revitalized this importantsegment even more and opened up avenues and growth prospects for the newplayers in the vast rural India. While the duty-cut is a welcome step, thereshould be a long-term, consistent direction to the policy, so that automobilemanufacturers can plan their future product portfolio accordingly. Due to various changes inthe Indian economic scenario, India is one of the most promising of the worldeconomies and is well on its way to becoming a global economic powerhouse inabout a decade.
It is also one of the fastest and most exciting automobilemarkets in the world. It is not surprising at all that almost every globalautomobile manufacturer is today keen on entering the Indian market. Demand in the Mahindracar segment will drive up the overall sale of passenger cars within the nexttwo years, production capacity is expected to be twice the total demand forcars. With the small car segment acquiring stability in terms of prices, theaction is shifting to the mid-size car segment. Sales in this segment will pickup as new models come in and income levels rise but still it will take sometime for its sales to come anywhere close to the „economy segment?. Wider availability offinance schemes by banks and financial institutions to buyers will also drivecar sales.
Sales in the used-car market is also expected to do well as more andmore older models get replaced by newer ones at a faster pace. The coming in ofEuro III and IV norms of environmental concerns will also increase scrap pagerates. Export potential is alsohopeful and promising.
With production surplus in the domestic market, Indiawill emerge as one of the leading car sourcing points in the Indiansubcontinent.