India’s passenger vehicle market is now globally critical. North America sees high interest rates and prices with a looming labor strike. The EU is affected by war. China sees huge losses in domestic production. Japan’s export vehicle market to China has slowed. US, Korean, and German manufacturers are in green energy transformation. Demand is cloudy in India as manufacturers are waiting to continue market recovery.
Traditional global manufacturers, Indian joint ventures, and Indian manufacturing growth see continued growth from 2022. They are now trying to forecast holiday season sales.
A Dynamic India is now a Top-5 marketplace in the global vehicle market (depending on counting units, revenues, and vehicle types). Traditional global vehicle manufacturers compete fiercely in India for unit sales. Global sales mix changes reduce expectations of trailing manufacturing margins in India. Asia now contributes more than 50% of global new vehicle sales (China, India, Japan, Korea, and more).
India’s marketplaces are unique with two-and-three wheeled vehicles having a role in unit sales counts. Early 2023 sales of 3-wheeled vehicles show sharp unit sales increases – a major portion of overall vehicle unit sales increases. Premium vehicle (SUV) sales are solid. Traditional manufacturing joint ventures, and less expensive products, still account for substantial volumes in the Indian vehicle market. Forecasting is less clear on what consumers will actually buy if economic recovery continues.
Newcomers are looking to become Alien Invaders destroying traditional global vehicle manufacturers margins and volumes in some marketplace segments (premium, luxury, electric vehicle/new electric vehicle). Examples are BYD (offered a USD$1B investment in new factories and was turned down by the Government), Foxconn (looking to enter global vehicle manufacturing), and Tesla (actively talking to the Indian government). The Dynamic India marketplace is a highly regulated marketplace in transition to a different future than predicted even last year.
Increases in the Indian vehicles sales market are raising concerns over the last quarter. Healthy unit 2022 growth increases of more than 20% in some sectors, as recovery from 2021’s depressed year proceeded, are not consolidating. The Indian Federation of Auto Dealers Association reports inventory of unsold vehicles is climbing from a health 30-35 days in August 2022 to a worrying 50-55 days in July 2023 and 58-63 days in August.
Global manufacturers are seeing 2023 vehicle inventory increases in China were due to some local regulatory changes in early 2023. Tesla’s price reductions at different times in various global markets have decreased margins (increased losses) for EV/NEV’s. One aspect of the price competition sees increased inventory of EV/NEV’s in global markets (North America, China). Global manufacturers have no “safe margins” to cover transformation in marketplaces -- and will look to India for sales.
Indian inventory increases are a warning for rosy forecasts. The effects of all of the transformations in energy production, manufacturing, green energy, and technologies will be a challenge to a Dynamic India. Managing thru these changes will challenge policy and enterprise execution.
For more analysis and notes on a Dynamic India see http://www.ekalore.com/india-business
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