Ammar Master, Senior Manager, Asia Pacific Vehicle Forecasts
19 May 2020
19 May 2020
India loses global spot
“We have to learn to live with the virus”, Lav Agarwal, joint secretary of India’s Ministry of Health and Family Welfare, and the spokesperson for the government’s daily COVID-19 briefings told the gathered media on 8 May. At the time of writing, the number of infections exceeded 100,000 and more than 3,000 lives had been taken by the virus.
Having lived with COVID-19, the automotive industry is slowly restarting operations, albeit in a gradual manner, as it complies with the ‘new normal’ of strict safety and hygiene protocols, lack of sufficient manpower and decimated demand.
Until recently, India was well on its way to claiming automotive glory by becoming the world’s third-largest Light Vehicle market within the next few years. Our own analysis last December indicated that the country was on track to remain in fifth position this year, climbing to fourth place in 2021 and finally reaching the third spot in the global rankings by 2026.
Alas, this is no longer the case. As the coronavirus spread across India and the government quarantined the entire country, we were forced to rein in our expectations of the market.
As a result, we have slashed our 2020 sales forecast from 3.55 million units (+1% year-on-year) in December 2019 to 1.88 million units (-47% year-on-year). In other words, the impact of COVID-19 on the Indian economy and consumer sentiment is set to wipe out nearly half of this year’s potential Light Vehicle demand.
Not only that but the industry will have to live with the effects of the pandemic well beyond the current year. With that in mind, we also trimmed our outlook for subsequent years by 30-40% when compared to our December 2019 projections.
India has, in the process, lost its place amongst the world’s leading Light Vehicle markets and will now be relegated to seventh place by the end of 2020. Nor do we expect the country to return to fifth position before 2022, while the accolade of becoming the world’s third-largest Light Vehicle market has been pushed back by six years, to 2032.