India is projected to lead global growth in light vehicle production, with a compound annual growth rate (CAGR) of 4.6% from 2023 to 2033, according to S&P Global Mobility. This growth rate surpasses the previous decade’s 4.1%, positioning India as a frontrunner among major countries. By 2023, India has become the fourth-largest light vehicle producer, manufacturing 5.4 million vehicles, ahead of Germany and South Korea. In contrast, Mainland China is expected to experience a CAGR of only 1.7%, while the US anticipates a mere 0.3% growth. Japan and South Korea are projected to decline by 2% and 2.6%, respectively. However, Germany will continue to grow, albeit at a slower rate of 1.1%.
Despite these promising projections, India faces challenges, particularly in the electric vehicle sector, where inadequate charging infrastructure and high manufacturing costs could hinder sales. Additionally, high inventory levels reported by dealers and manufacturers may lead to steeper discounts during peak seasons and more aggressive export strategies. Associate director of light vehicle production forecasting — Indian subcontinent, S&P Global, Mr. Gaurav Vangaal, highlights the importance of India as a stable market with significant investment from global carmakers, noting that the domestic market has a low penetration rate of 38 vehicles per 1,000 people. However, rising vehicle prices, driven by the new Bharat Stage-VII emissions standards, could impact demand, especially as the market sees a reduction in first-time buyers following the exhaustion of pent-up demand from the pandemic.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
