A study by Booz & Co, that calls itself “one of the leading management consultancies in the world,” predicts that India will be the world’s 4th largest car market by 2015 and will surpass the European Nations by 2015. I don’t doubt that India is a very important market with great growth potential. But Booz & Co must have consumed too much of its namesake.
Let’s check again. “Our research portrays that with the rapid expansion of the automotive industry in India, it is expected to surpass the European nations by 2015 and generate sales up to 6+ millions units annually by 2020. With China and India ramping up in parallel directions, the global auto industry is sure to get reshaped, thus propelling Asia to capture 65% of the total market size by 2020,” indeed said Vikas Sehgal, Partner, Booz & Company, India.
Really? Well, as chronicled in out yearly review of car sales around the world, 2010 new car sales rose 31 percent to 1.87 million in India. Assuming the same 37 percent growth rate for each year, India would reach 6 million plus by 2015. Setting the target to 2020 is conservative.
These are the Top 5 in 2010 by sales
| Rank | Country | Units (million) |
| 1 | China | 18.06 |
| 2 | USA | 11.59 |
| 3 | Japan | 4.95 |
| 4 | Brazil | 3.51 |
| 5 | Germany | 2.91 |
With 1.87 million, India is far removed from the Top 5, we won’t even bother to list how far. Now looking at the list, Booz makes an assumption that is even more revolutionary: If India is the world’s 4th largest car market by 2015, then Booz must assume that Brazil will be in #3 by 2015. Looking at Brazil’s numbers, that is entirely possible.
The graph above says (even more shocking) that Booz assumes exactly zero growth for the U.S. car market from 2014 on out.
But surpassing the European Nations by 2015? Our review of 2010 car sales says that in the EU, sales had dropped 5.5 percent by 2010, but still stood at 13.36 million units. If the EU, which shares common borders and to a large degree a common currency, would be counted as one market, it would be the world’s second largest car market, eclipsing the U.S.
If Booz thinks that India will surpass the EU by 2015, and generate sales of 6 million or more by 2020, then logic dictates that Booz thinks that the EU and Japan will implode. The EU would have to be in place 5 with maybe 3 million, and Japan would be relegated to place 6 with maybe 2.5 million. Ain’t going to happen, at least not that fast.
One sometimes wonders who pays money for studies that have been made under the influence. You know what’s worse? The number of media outlets that reprint this garbage without checking.
I think you’re reading too much into it. It seems clear that they’re talking about surpassing the European nations individually, not as a collective. In other words, when they sell more than Germany they sell more than any European nation.
Couldn’t it be that they think Brazil will stagnate? China, USA, EU, India? With Brazil and Japan beneath that? I don’t think they must assume Brazil in #3?
I’m also always skeptical when I see graphs where a line stays perfectly straight. That goes for USA, China above. That is nearly impossible over these kind of time periods. To think that the USA will not fluctuate up/down or that China can keep growing that long without any adjustments is crazy.
No they cannot when they say that India “is expected to surpass the European nations by 2015” and will be in 4th place.
Ah yes.
It appears the distinction is they’re forecasting India tops the European Nations, meaning ahead of Germany, France, UK, et al on a standalone basis (or in other words, Germany). Yes, you rightly say it’s fair to consider the EU as a single market, but based on the quote you plucked from the Booz report, they did not say India would pass the “EU”. Just a thought.
quite often it makes more sense by consulting madame Cleo the psychic too.
Can anybody predicted US will be so screwed 5 yrs ago, lehman bros went kaputsky?
China should continue as the largest market, and growing to 3x the US in 2040 isn’t entirely out of the question. Tho, I think China will probably sputter around 2x the US rate, as it takes time to get incomes up to support (new) car ownership, even if the new cars are third-world microcars.
India has much weaker economic fundamentals, but I can see them eventually passing the US rate just based on moving vast numbers of shitboxes with levels of sub-Chinese-quality which would make Yugo and Lada blush. But, at their current 2M volume, it’s going to take a while to build up the industrial base to make this happen. Perhaps, the Indian will be boosted by Chinese-managed Vietnamese-built imports?
Brazil may be growing fast, but they’re only about 2/3 the size of the US, so I doubt they’ll pass 1/2 the US rate. They’ll easily pass Japan, tho.
The US and Japan should be more-or-less stagnant – economically, Booz is (correctly) predicting these former powers of growth to be like Europe. Holding, but not really growing.
Hi guys,
By European Nations don’t they mean the bunch of nations that currently sit at between 1.9 and 2.9 million annual sales? Namely Germany, France, the UK and Italy, to which we could add Russia?
At +31% a year India should be above 3 millions sales as early as 2012, so it’s conservative to predict India will pass these Nations by 2015…
It would then be 4th behind China, the US and Brazil… the question being whether Japan will stagnate/slow down to a level below India by then.
If that’s what they mean, it makes their study ok at least until 2015. Not sure about the stagnation of the US market though as the US population will continue to grow significantly during the period and that very factor should be enough to create some growth in the car market
Matt
Miraculous – Take Global Insight’s 5 year forecast and tag a straight line on to the end of each country. USA Today front page graphic here we come