Car density in India to increase considerably by 2015; Crisil

The Indian automobile industry, that has been growing at the best pace ever since the starting of this year, is expected to grow at even higher pace in coming years. According to a recent study done by Crisil Research, the number of households who will have a car of their own will reach up to 117 million by year 2015. According to this study, the industry will grow at a pace of 17-19 per cent to Rs 4,20,000 crore during this period. According to a statement given by Mr Nagarajan Narasimhan, Director (Operations) at Crisil Research, to the reporters, considering the higher income levels and the stiff competition in the car market on pricing, 60-70 million households in India will be upgraded to a car-affordable financial level by 2014-15, taking the number of households at this level to 117 million.

However, even after having these many car owners in the country, there will still be a vast growth potential for the car makers as the number of 117 million car owners simply translates into the density of 17 car owners per 1000 people in the country. India is still far behind countries like European Union and US where the figure is about 604 and 440 car owners per one thousand people, respectively. According to Mr Narasimhan, the capacity constraints and launch of new cars will drive the investment of major auto manufacturers and component-makers. The report further elaborates that as the competition in the market intensifies, the major auto makers will have to strive to maintain their market shares, which in turn will increase the costs and mount the pressure on margins.