China: Yesterday's News?
May 24, 2007

India is predicted to be the fastest-growing auto manufacturing nation in the next few years, according to a forecast by New York-based PricewaterhouseCoopers. The firm predicts between 2006 and 2011, India –- not China -– will be the fastest-growing auto manufacturer among the world’s top 20 carmaking countries.

"Everyone is looking at India after what happened in China,'' Ashvin Chotai, who works in London as director of Asian automotive research for Global Insight, told Bloomberg News. "There's no other place that even comes close.''

In the year ending March 31, India’s passenger car sales increased 21 percent to 1.38 million. By 2015, they're expected to more than double, according to the Society of Indian Automobile Manufacturers.

That’s not to say China isn’t still booming. Global Insight predicts that Chinese sales of light vehicles -- cars, trucks and vans that weigh less than six tons -- will soar 50.6 percent to 12 million by 2012.

In fact, China will outpace India this year alone. Part of the problem is that India's government isn’t keeping up. "We are not able to grow the way we should,'' Rajeev Chaba, president of General Motors India, told Bloomberg. He says India's inadequate roads and ports are part of the reason the country trails China as a car market. "In China, the government is supporting the industry in a big way,'' Chaba added.

The growth in India is not lost on automakers. General Motors, Honda, Volkswagen AG and half a dozen other companies plan to spend at least $6.6 billion in new factories in India. Fiat, Nissan, Renault and others are linking with local manufacturers. Others, like Chrysler, want in.

Why are they betting on India?

· Pent-up demand. Only 7 of 1,000 people own a car compared with 450 per 1,000 in the U.S. and 500 per 1,000 in Western Europe.

· A growing middle class estimated at 216 million of the country’s 1.1 billion people.

· Entry of automakers beyond India’s own Maruti, Hindustan and Premier Automobiles.

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