India expected to become third largest automotive market in 2020

India has already moved ahead of France, Italy and the UK in establishing itself as the sixth largest automotive market. Indeed, India is expected to move into third position behind the USA and China by 2020, as predicted by JD Power and Associates.

2.7 million light vehicles were sold in 2010 and this is expected to rise to 11 million by 2020, albeit trailing China’s expected 35 million and the USA’s 17.4 million by some distance.

This expansion is in part down to the Indian Government’s support for the automotive industry. Among these policies is the introduction of a reduction in sales tax and incentives for car makers to build and export vehicles overseas. As a result many car makers have switched production to the country and designed Indian specific models.

The Green Car website says that “during 2010, close to 80 per cent of all new passenger vehicles sold in the country were either mini cars or subcompact passenger cars – this compares to just 24 per cent in China and three per cent in the USA.”

Having said that, the report highlights some future and ongoing challenges: India still suffers from an international trade deficit; chronic government budget deficits and an under developed infrastructure. On this basis India has set aside billions of dollars for investment in power generation and road networks.