22/05/09
Lead
India will drive car sales in the Asia-Pacific region.
Author 丨 Yang Jing
Responsible editor 丨 Xu Jinkai
Edit 丨 Chic
A few days ago, LMC Automotive said based on the sales statistics of the Indian auto market that the Indian auto market is expected to gain momentum this year and has very good long-term growth prospects. With the global pandemic and supply chain impact this year, India is expected to be the main driver of growth in the Asia-Pacific region.
The Indian auto market has consistently outperformed expectations in the first three months of this year, with total sales of light vehicles estimated at around 1.1 million units. Due to last year's higher base, it grew only 1% year-on-year, but the total was 20% higher than in the fourth quarter of 2021 due to the ease of chip shortages.
Compared to April 2019, retail sales of passenger cars and tractors in India increased by 12% (to 264,342 units) and 30% (to 48,319 units) in April this year. Two-wheelers, tricycles, and commercial vehicles decreased by -11% (to 1,194,520 units), -13% (to 42,396 units), and -0.5% (to 78,398 units), respectively.
In particular, the 10-month delivery time shows that india's automotive demand remains strong. Not only has the pandemic subsided, but a number of new models launched this year have also attracted consumer interest. Unless the Russian-Ukrainian conflict escalates and global supply disruptions, sales are expected to grow more in the second half of 2022.
However, Vinkesh Gulati, chairman of the FATA (Indian Automobile Dealers Association), warned that the global automotive industry continues to face a tight supply situation, the disadvantages of semiconductor shortages remain, coupled with high metal prices and container shortages, customers in the passenger car sector will continue to experience a long waiting period.
In particular, the Reserve Bank of India raised the repo rate by 40 basis points, so the growth of car sales is likely to slow further. The FADA believes this sudden move could further dampen the overall mood of the industry as it would dampen excess liquidity and make auto loans expensive.
Overall, India's light vehicle sales this year are expected to rise 13.5% y/y to 4 million units.
In contrast, LMC Automotive expects sales in China to decline 0.5 percent to 25.4 million units this year. The lockdown has been extended in many cities and continues to disrupt economic activity. In addition to exacerbating supply constraints, the lockdown has undermined consumer confidence and purchasing power.
Changes in light vehicle sales in Japan and South Korea, two other major Asian markets, are also expected to be weaker than in India, where sales were affected by an increase in the Opmi Kerong case in February and global supply chain bottlenecks continue to hamper production and sales. Demand in South Korea remained strong, but sales were constrained by supply constraints due to shortages of components, including semiconductors.
At the same time, cumulative sales in the ASEAN region are expected to increase by 11% y/y to 3.1 million units in 2022. Forecasts for Indonesia, Thailand, Malaysia, the Philippines and Vietnam all recently all raised slightly, with March sales in the region beating expectations.
In the long term, LMC Automotive expects India to be one of the fastest growing markets in the Asia-Pacific region, with light vehicle sales expected to grow at a CAGR of 5% over the next seven years. The only other major markets in the region that are growing at roughly the same rate are Thailand, Vietnam and the Philippines, but their respective annual sales are significantly lower than India's.
In recent years, the landscape of the global automotive industry has changed dramatically due to the prevalence of the situation. The pandemic has been raging since the beginning of 2020, and the severe shortage of semiconductor chips has also had an impact. The shift to electric vehicles and fluctuations in international crude oil prices are two other major factors that determine buyer preferences.
According to 2021 global light vehicle sales data compiled by Motor1, about 82 million passenger cars will be sold worldwide in 2021, an increase of 5% over 2020, and India remains the world's fourth largest automotive market, second only to Japan and ahead of Germany, France, the United Kingdom, Brazil and South Korea.
Sales were weaker in some countries, such as Italy, with the Italian auto market ranking 12th. The country's sales are about 2 million units, behind Russia, but still ahead of Mexico. This is a shift in structural proportions, as the Italian market has traditionally always had a place in the top 10.
Markets such as Germany, France, the Uk and Spain have declined, although most of these countries still rank in the top 10. Experts say strict emissions standards in many of these countries mean that any government is prioritizing public transit options, electric vehicles or both. As far as electric cars are concerned, the vast majority of people may still not be able to afford one, or want to wait a little longer.
China remains the world's largest automotive market, both in production and sales. Significantly higher than the roughly 15 million vehicles sold in the U.S. last year, the U.S. is in second place, but China's push for electric vehicles could help the market here expand its advantage over other markets.
In terms of electrification, the Indian automotive industry is more confident. India's Transport Minister Nitin Gadkari predicts that the number of all-category electric vehicles in India will reach 30 million in the next two years. "Sales have now exceeded 1.2 million electric vehicles, and by the end of December, that number will rise to 4 million and will reach 30 million over the next two years," he added.
In order to further develop the new energy vehicle market, India has repeatedly invited Tesla to build factories in India without success. Instead, Toyota Motor India's subsidiary announced that it would invest Rs 48 billion ($623.7 million) in the production of components for electric vehicles. According to BloombergNEF, 53 percent of new cars sold in India will be electric by 2040, compared with 77 percent in China.
Yang Jing
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