Powered by a strong domestic market and availability of cheap finance, increasing income levels and changing consumer demographics and preferences, the Indian automobile industry is on the top gear. With most of the global auto majors entering Indian markets and domestic players gaining firm footing, it is expected to transform the entire automobile landscape. India is fast becoming the global growth center for small cars market with sales zooming 25% in FY05 compared with FY04. Over the past five years, the competitive landscape in the passenger cars segment has completely changed. India is producing six lakh small cars annually and is the third largest market for the small cars in the world. With the passenger cars sales having crossed one million units including the utility vehicles, Indian automobile sector is sure to witness a booming time ahead.
The entry level and compact car segments together occupied 76% market share in FY05. Keeping the pace with production and domestic sales, car exports reached to 1,65,000 units during last fiscal with Hyundai, Maruti and Tata Motors leading the pack. As per industry estimates, India would reach the production mark of two million units by 2010 with exports accounting for half of the production. Jose Paul, Industry , Automotive & Transportation practice, Frost & Sullivan, India says, "With the passenger car market set to grow at a CAGR of about 11.5% till 2010, this translates into one of the top small car market."
Given the low penetration levels-less than 10 cars per 1,000 people-when compared with developed nations, foreign players are eagerly looking to establish their presence in India for the past three years. As the market for small cars is expanding, foreign majors like Toyota, Volkswagen and GM have been showing interest in the small car segment. The big three small car makers in India such as Maruti, Hyundai and Tata Motors have announced capacity enhancements through new plants and expansions. Last year, industry has seen the successful rollouts of small car models like Hyundai Getz and Suzuki Swift.
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