Delhi, Delhi India (PressExposure) September 26, 2007 -- India has dropped to the 14th rank (from 11th position in 2005) in 2006 world rankings for growth in the production of passenger cars.
The OICA (International Organization of Automobile Manufacturers) has noted that India clocked in a rise of 16.5% in 2006 as compared to just 7% in 2005. But still, the country dove by three positions in the rankings primarily due to the fact that countries like Nigeria and Finland, whose annual passenger car production is in four figures only, registered an outstanding growth of more than 50%.
But in production terms, India climbed one step up to the 7th place in 2006 by producing over 14.7 Lakh cars. The country replaced UK that reported a sharp decline of around 9.6% from 2005.
The Government of India has been giving tax rebates and putting other measures in place to make the country a low cost car producing destination in Asia. The factors that are working in favor of India are its cheap labor cost (this is the principal reason why India is considered for production outsourcing), expanding middle class base, rising standards of living among affluent class and increasing manufacturing. On the back of these strong parameters, foreign investors are increasingly channeling more investments into India.
Mr De Filippis Giovanni, Managing Director, Fiat India, stated to Business Line that decline in the position of India is not a cause of concern. "The market is robust. We expect the growth momentum to be sustained even this year", added Mr Giovanni, according to the news published by MoneyControl.com on July 3, 2007.
RNCOS report "Indian Automobile Sector - A Booming Market" calls Indian automobile industry a flourishing industry with immense growth potential. Among all the segments, passenger car (contributed over 77.9% in 2006-07) dominates the passenger vehicles market in India. The production of passenger vehicles crossed 1544,800 units in 2006-07, whereas the commercial vehicles' production stood at nearly 520,050 units in 2006-07, a jump of around 33% from 2005-06. This incredible increase in production will push the car sales that are expected to grow at an annual rate of 12% from 2007-08 to 2011-2012.
The report presents a comprehensive picture of the Indian automobile industry, including production, sales, and export of passenger cars, commercial vehicles, 2 and 3-wheelers, and auto components. It gives a rational analysis of factors impacting the industry both in positive and negative ways.