India's hatchback market
This Research Note from Ipsos Business Consulting looks into the market dynamics, industry trends and competitive landscape of the hatchback segment of the automotive industry.
Market overview
India's automobile industry is one of the largest recipients of foreign direct investment within the country and accounts for about 8 per cent of the economy. The industry is not only gaining ground as a global production hub, world-leading brands are increasingly setting up local operations to tap India's lucrative domestic market. This has seen more activity across the entire consumer market as global luxury automobile brands target the country's burgeoning upper-middle class and high net worth individuals, while major international carmakers are entering the highly competitive small car segment.
The industry is not immune to global dynamics, however, and growth within the auto sector and the overall economy has been sluggish for the past few years. As a result, this year's sales are expected to grow at a lower rate than the 5 per cent achieved in 2011-12.
Several factors have contributed to the slowdown including higher fuel prices, excise duty hikes and economic turmoil. Utility vehicles are the auto sector's the greatest hope, however, the recent 3-per-cent rise in excise duty for sports utility vehicles (SUVs) may dampen the segment's performance.
India is expected to become the world’s third largest automobile market by 2030, behind the US and China, according to industry forecasts. This confidence is based on drivers including low vehicle ownership within India, anticipated high levels of economic growth, substantial government investments in infrastructure and an increasingly upwardly mobile middle class.
