News

Can India Become the Next Automotive Hub?

Issued at 2013-07-03



India's passenger car market is poised to grow rapidly and to shift from a focus on "cheap" products to cars that offer more value for the money. This evolution toward value will require automakers to invest more in their Indian operations in order to create products based upon the distinct needs and buying behaviors of Indian consumers.

Given India's solid growth forecast, the stage appears to be set to transform the country into a full-fledged automotive hub. To gauge the likelihood of this shift, McKinsey & Company assessed the situation in terms of six factors:

  • Urbanization. Between 2010 and 2020, India's urbanization rate will grow from 30 to 40 percent and city-dwellers will increase their share of the country's GDP from 58 to 69 percent.
      
  • Demographics. India's expected economic growth will pull more households out of poverty and into the key car-buying segments.
     
  • Financing. The increased availability of affordable credit has been a key factor in promoting new car and light truck sales.
     
  • Vehicle penetration. Projected strong vehicle sales will boost penetration by 2015. 
     
  • Competition. India's large, low-cost talent pool has attracted multinational automakers and suppliers, which have established production facilities across the country.
     
  • Value for the money. India's automotive scene has evolved from a low-cost market into one focused on value, which suggests the strong future potential for feature-intensive offerings by OEMs

Source: McKinsey&Company



Related News