If the buoyant sales of passenger vehicles in the domestic market in August 2016 are any indication, then 2016-17 is headed to be a bumper year for Indian vehicle manufacturers.
Over the past 10 years, the Indian passenger vehicle industry has scaled new heights, achieved many milestones and has grown substantially – in fact, it has more than doubled in size. The growing economic prowess of the country has translated into a booming auto market, which has now been among the fastest growing ones as well.
As we take a look at the decade that has shaped and re-shaped the fortunes of PV manufacturers in India, some staggering statistics emerge. The decade not only saw global markets reel under pressure from the economic meltdown, but also how a nascent developing market like India evolved into the sixth largest in the world.
As the world economy sputtered in the aftermath of the economic slowdown, in India, the PV sector recorded a positive CAGR for seven consecutive fiscals between FY2007 to FY2013, while the volumes almost touched 2.7 million units in FY2013.
FY2014 saw the first major downturn for PV industry in many years with a dip of nearly 7% YoY, as sales fell to around 2.5 million units. However, it was short-lived as sales immediately bounced back with a 4% YoY growth in FY15 to over 2.6 million units. Following up, 2015-16 was a record year in terms of PV sales as they crossed 2.7 million units for the first time-ever, with record sales of both cars and utility vehicles.
During the decade, the industry has generated employment for 31 million people with two million contributed by direct employment.
A decade of records
Starting in 2006-07, India’s automotive industry was demographically and economically, well-positioned for growth. The reign of small cars had helped Maruti Suzuki India, which produced the most successful models of the time, cement its position as the top carmaker in the country, followed by Hyundai Motor India, which was cashing in thanks to the Santro.
With a total of 1,379,979 PVs sold during the fiscal, the industry crossed the coveted 1-million mark for the first time while UV sales also posted double-digit growth with sales of over 220,000 units in the year.
Fast forward to 2010-11, UV sales touched the 300,000 sales mark for the first time, followed by the passenger cars segment crossing the 2-million mark for the first time in 2011-12. However, 2012-13 was the year of UVs and Vans. During the fiscal, UVs crossed the 550,000 units mark for the first time while vans reported their highest ever sales at 237,298 units.
The boom of the compact SUV segment with new entrants like the Ford EcoSport and the Renault Duster expanded the UV segment significantly and also prompted long-time segment leader Mahindra & Mahindra to embark on its own path of innovation to face the rising competition.
However, it was in 2015-16 that the PV industry reported its highest ever sales numbers. From nearly 1.4 million units in 2006-07, PV sales more than doubled to 2,789,678 units, with passenger cars crossing 2 million sales for the second time and UV sales closing in to nearly 600,000 units.
The next decade is likely to establish India as among the world’s biggest automotive markets and the start to 2016-17 has been a promising one as well.
Given the strong sales in 2016-17 (956,839, +9.23% in April-July 2016) so far, improving buyer sentiment on the back of a good monsoon and implementation of the Seventh Pay Commission’s recommendations, along with the expectations of a bumper festive season, PV sales are set to cross the three million units mark during the fiscal.
A slew of new model launches planned this year, along with strong GDP growth will continue to fuel demand in the PV industry.
Additionally, the new Automotive Mission Plan 2026 also envisions that by 2026 the Indian auto industry will be among the top three in the world in terms of engineering, manufacturing and export of vehicles as well as auto components and will encompass safe, efficient and environment friendly conditions for affordable mobility of people and transportation of goods in India is targeting a growth 3.5 to 4 times in value to about Rs 1,616,000-Rs 1,888,500 crore by 2026. This will be based on a growth of 5.8 percent with an average GDP growth of 7.5 percent during this period. This will be in line with global standards growing in value to over 12 percent of India’s GDP and generating an additional 65 million jobs. Currently, the auto sector accounts for 7.1 percent of the country’s GDP and 49 percent of the manufacturing GDP.
Given the burgeoning customer demand particular for new models, the make-in-India mantra and global majors keen to have a slice and more of the humungous Indian market, expect the PV market to be among the newsmakers in the next decade.
Also read: Passenger cars record highest sales growth in 5 years during 2015-16