Indra’s Drishtikona (Viewpoint)

Cars, Cars, and Cars

Posted : October 23, 2004 at 8:53 pm [IST]

Recently, I came across some reports that again made me really happy. I started dreaming my country leading all others in the world.

One of them is the third BRIC (Brazil, Russia, India, China) report from investment banking firm Goldman Sachs. India is projected to have the largest number of cars in the world - 611 million to be precise - by 2050. It means every sixth car produced in the world will be sold in India. Passenger car density in India will continue to be a third of China’s until 2025. India will overtake China somewhere in the vicinity of 2050, when the country will have 382 cars per thousand people compared with China’s 363 in that year. There will be 14.35 million cars in India by 2010, in line with the industry’s projection of adding a million cars a year from next year. It presumes a base of 9.03 million cars in 2005.

The methodology takes into account historical data to estimate elasticities of per capita use to per capita income, combines car firms’ forecasts of per capita income to map out the projections of per capita paths of automobiles, and uses the population projections from the census is used to scale these up into total forecasts. The salient features:

” The report, penned by Goldman Sachs analysts Dominic Wilson, Roopa Purushothaman and Themistoklis Fiotakis, attempts to gaze into how BRICs will fare on oil, auto and stock market capitalisation.
” In each case, BRICs could be a major source of growth within 10 years and, perhaps, a dominant one in 20..
” Global auto demand growth may accelerate as the BRICs move through the “sweet spot” for consumer durable spending, peaking in 20 years. Given that auto sales drive fuel demand, oil projections will also have to be reworked.
” The auto industry in the two countries will be powered by a trend in which “people move through different income levels” in such a way that significant numbers of households find themselves in a position where they can afford cars.
” The “sweet spot” for growth comes at a per capita income of $8000, a level that corresponds to $3000-$4000 at current exchange rates for most economies.
” By 2005, cars in India will be eight per thousand; this will cross 12 by 2010, 30 by 2020 and 382 by 2050.
” The US, by contrast, will have less than 555 cars per thousand in the same period.
” In absolute car numbers, Indians will own 610 million, Chinese 514 million and Americans 233 million by 2050.
Of course, all those cars will need good roads to zoom on. In Germany, US and most other affluent countries, it was the autobahns and highways that fuelled an amazing chapter in their automobile industries.
Investment in the auto sector is over Rs 65,000 crore. The turnover of the component industry is set to double over the current level of Rs 25,000 crore. By 2012, their combined output would exceed Rs 2,00,000 crore.

And for the development of roads, the country is thinking in terms of investment over Rs 2,00,000 crore.

For senior citizens like me, this is a nice dream to be happy with.

- Indra

Category: Manufacturing |