Global carmakers forecast scorching growth in India's auto market
Global carmakers forecast scorching growth in India's auto market
Jay Shankar, Bangalor, India
Global carmakers have stepped on the gas in India, forecasting fast-paced growth in a market they say is wide open.
Toyota Kirloskar Motor, a joint venture with Japan's Toyota, said over the weekend it was bullish about the Indian automobile market and forecast revenues to surge 58 percent to US$217 million.
The firm, which plans to launch a new model this year, said growth would be driven mainly by an eight percent cut in excise duties announced during the February federal budget, as well as a rise in disposable incomes.
"The market will grow and grow as (Indian) customers get accustomed to global trends," said Atsushi Toyoshima, managing director of the Indian venture.
During the three months to May, the Indian automobile industry had grown between 36 percent and 40 percent, he noted.
"India has a population of one billion and the total cars sold last year were only 700,000 -- which constitutes about 0.7 percent of the people. In the future very dramatic changes will occur the same way as China," said Toyoshima.
"Maybe one can see a growth of 40 percent or 100 percent. But no one can say when."
Late last year, India's crowded passenger auto market sought to woo customers with big discounts, soft loans and freebies but now the market is revving up after duty cuts, analysts said.
Small cars enjoy a 60-percent overall market share and Suzuki Motor Corp.'s joint venture, Maruti Udyog Limited, has doled out most of the keys despite the recent entry of several global auto giants such as Hyundai, Ford, Daewoo, Fiat and General Motors.
Still, Maruti enjoys nowhere near the success it did in the early 1990s, when it controlled more than 90 percent of the newly-opened, free market Indian auto sector, which had been dominated by antiquated versions of British car models and Italy's Fiat.
Stock brokers say the success of the Maruti share issue, the eighth largest in India, could lift the capital market sentiment for public share offers, enabling industries to tap into a huge pool of money.
The Society of Indian Automobile Manufacturers (SIAM) has also projected the sector to grow around eight percent for the current fiscal year ending March 2004.
He said "brisk infrastructural activities" and softening interest rates had also created a favorable environment for growth.
"SIAM believes that the outlook for the (car) segment is quite encouraging and it has the potential to grow at double digit rate if no abrupt changes are made in the policies that influence trade," SIAM chief R. Seshasayee said.
The Indian subsidiary of U.S. auto giant Ford has projected growth of 20 percent in the current financial year and has announced plans to launch a new model.
"The Indian (automobile) industry is expected to grow 10 percent during the current year due to a cut in excise duties and introduction of new models," said David Friedman, managing director of Ford India Ltd.
SIAM said the sale of cars in India jumped 41 percent in May to 55,166 units from 39,150 units logged in the same month last year.