Indian auto boom gets bubblyWall Street Journal, 30 August '10
Segment Y in the press
- India's manufacturing sector benefits from China's challenges
- Uber's tricky vision aims to tempt Indians from car ownership
- Mahindra to buy controlling stake in Peugeot scooter unit
- Luxury carmakers hindered by Indian potholes
- Global car groups to rev up India exports
- Nissan considers introduction of electric cars in Thailand
- Japan disaster affects Indian car production
- Indian auto boom gets bubbly
- India doesn't need green cars: Environment minister
- Superbike sales rise as Harley Davidson enters India
- Micra marks Ghosn's bid to make up for lost time
- Foreign luxury cars: Picking up speed in India
- Maruti Suzuki plans to drive into MUV segment
- In India, 'green cars' look like a hard sell
- Ford makes push to boost Asian presence
- Harley-Davidson plots India sales drive
- Harley-Davidson set to finally ride into India
- Superbike sales speed up in slowing economy
- 25 years later, second small car revolution
- India's car makers see glut
- PSA again exploring India opportunities
- Tough Times for the Tata Nano
- Can small really be beautiful?
- India cranks out small cars for export
- Will Tata's great car gamble backfire?
- Can Tata rev up Jaguar?
- Tata unveils world's cheapest car
- Automakers come knocking
- Coming soon, the $5000 car
- India's automotive plastics use to rise
- China readying new taxes on gas guzzlers
- New cars for under $5000
- At the Beijing Auto Show, signs of a behemoth to come
- Chinese automaker plans assembly line in Malaysia
- Chinese firm plans car plant in Malaysia
The chronic disease of the biggest auto markets in the world‒overcapacity‒could spread to India sooner than most people think. As everyone from Hyundai to Honda spends billions to rapidly ramp up their production here, sooner or later they will be making more cars than they can sell, say some experts.
"I see overcapacity even in the BRICs countries," said an executive of an auto consultancy. "The number of players (in India) has increased dramatically." The BRICs countries are Brazil, Russia, India and China.
That might seem hard to believe with car and commercial vehicle sales climbing to a record high of around 2.5 million in the year ended March 31, and in a country where just 12 people in 1,000 own a car or utility vehicle.
But it's an opinion that even some car manufacturers hold‒around one-third of the 200 auto executives who responded to a research survey out earlier this year predicted India would be struggling with overcapacity in the auto sector within the next five years.
It's still a minority view‒and hardly the 20% to 35% overcapacity companies are already dealing with in the U.S., Japan and Europe‒but it's something Indian auto executives (as well as investors and car buyers) should think about as they tune-up their plans in India. "Now there are 50 players in India and they are still building capacity."
But auto executives and analysts said that if the prices and products are right, India will have no trouble boosting passenger car and commercial vehicle sales. The research survey showed that 40% of respondents expect sales to climb to more than four million by 2014.
The real problem for auto companies in the not-too-distant future could be the lack of roads and parking spaces and possible rising fuel prices said, Paul Blokland, director of auto research company Segment Y Automotive Intelligence based in Goa.
"If you look five years from now then it may be impossible for people to use their cars or park their cars," he said. "That will be more of an issue than capacity."