India elbows Germany out of 4th place in global auto sales
ENTSCHULDIGUNG (excuse me), says India to Germany. The populous Asian country has overtaken Germany as the world’s fourth biggest car market by volume. What’s more, it is “on track to take the number-three position from Japan within three years.” This is according to a
Financial Times article last month, which cited that commercial and passenger vehicle sales in India grew by 8.3 percent last year to 3.99 million units. Yes, that’s million. Before we begin to salivate over this number, note that this total eclipsed the 3.74 million sales of Germany, whose own growth slowed to less than one percent. Perhaps more interestingly, the same FT article predicted that India is set to overtake Japan in third place by 2021.
Currently with 1.2 billion people, India is growing at a rate of “more than seven percent a year,” and mobilization is obviously going to grow—no doubt fueled by the low average selling price for passenger cars (pegged at around US$7,000).
Speaking of Germany, carmakers headquartered there are said to have been caught flatfooted by the “shifting landscape,” failing to capitalize on the robust Indian market. “With a few entry-level offerings, their share in India’s fastgrowing market is about one percent,” continued the article.
This increased motorization is being reflected even in imports. The Economic Times reported that Britain’s car exports to India hiked by 4.81 percent in 2018 compared to the year before. The Society of Motor Manufacturers & Traders (SMMT) revealed that UK manufacturers sold 1,199 units last year—rising from 1,144 units in 2017.
In terms of potential, India’s motorization level leaves much to be desired—and thus holds much promise. Car density, per Fitch Solutions, stands at 27 cars per 1,000 people. Compare this figure to 145 in China and a whopping 570 in Germany.
Meanwhile, we here in the Philippines last year went through the biggest freefall in terms of vehicle sales since 1998—falling by 16 percent after a multi-year bonanza. Those of you old enough to remember must note that 1998 came right after the beginning of the Asian financial crisis.
Industry leaders and overserves attributed last year’s (predicted) decline to the generally higher prices of automobiles as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) Law imposition. Coupled with inflation and the rise of fuel prices, car buyers basically stayed away from vehicle showrooms in 2018.
One of the keys to increased motorization that India and the Philippines can adopt comes from China. Building up a middle class is expected to bring about an economic boom brought about by “consumer class” spending. Of course, this is easier said than done even if the logic is undeniable. Wealth begets spending, and increased spending can also mean not having to endure our flawed public transportation systems.