Indian auto industry is a vast stagnant market

Have we reached a crescendo? Is 250K cars a month the max we’ll ever reach?

BHPian S15 recently shared this with other enthusiasts.

I was in the comment section of a foreign financial newspaper, and was having this debate with another commenter, and he said that Indian Market is a vast stagnant market.

My initial response was one of disbelief, but then he came back with numbers and graphs.

The passenger vehicle market has been stuck at more or less 3 million cars per annum for the past decade i.e. 250,000 registrations a month on average since 2012. Link.

Thus, it is – as you mentioned correctly – a vast market, but, increasingly a stagnant one.

I, out of curiosity, did decide to check out the linked website and was presented with a couple of interesting graphs.

So, I thought we’ll discuss it here. Have we reached a crescendo? Is 250K cars a month the max we’ll ever reach?

If yes, why have we peaked at this number?

If no, why are we stuck at this number for the past decade?

And anything else that you people might want to add?

Here’s what BHPian FlashMustang had to say on the matter:

Unlike consumable items, buying cars isn’t a frequently recurring activity for the majority of the population.

With increasing reliability of cars over the years, the longevity of the cars that are sold can be expected to go up. This leaves more cars in the pool of used cars. So, for buyers of cars, there’s more cars available in the used pool.

All of these factors, in my humble opinion, contribute to this trend.

In a lot of major economies where private transport is favored, there’s actually a declining trend of the same number.

United States:

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Out of curiosity, I checked a few more countries/zones.

United Kingdom:

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Euro zone:

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So, even to keep the number of new registrations flat, it requires a lot more new buyers. To even make this happen, there’s a need to increase wealth creation and percolation of benefits to a larger population. With the exception of China, I did not see an upward trend in some of the countries I checked out.

These are just my thoughts.

Would love to hear from more experienced members.

Check out BHPian comments for more insights and information.

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