| Even as Tata Motors’ Nano went on display at the Auto Expo, a survey by Invest India Market Solutions (IIMS Dataworks) shows that as many as 12.8 million Indian households can be potential buyers for entry-level cars in the years to come, 1.6 million of them in 2008 alone.
|
| |
| This is more than double the entire annual car market of 1.2 million and indicates the potential market for competitively-priced entry-level cars, since this is the level at which Indian non-car owners typically enter the market in India.
|
| |
| Last week, Crisil Research said the Nano price point would see a 65 per cent increase in the number of families that can afford a car.
|
| |
However, it forecast that at the significantly redefined threshold for car ownership in India, annual car sales have the potential to increase by 20 per cent over 2007-08.
| SMALL CAR, BIG MARKET |
| |
Total
household
earnings of
Rs 2 lakh plus |
Households
that own
a car |
Households
that own
only a
2-wheeler |
Households
with
neither |
Households
that could
opt for Nano
as first car |
Immediate
demand:
Households
actively
aspiring
for first car |
| Rural |
6.72 |
1.4 |
3.29 |
2.04 |
5.33 |
0.61 |
| Small towns |
2.64 |
0.7 |
1.33 |
0.6 |
1.95 |
0.27 |
| Class I towns |
5.14 |
1.94 |
2.45 |
0.76 |
3.2 |
0.47 |
| Super metro |
4.51 |
2.11 |
1.68 |
0.72 |
2.4 |
0.25 |
| Total |
19.03 |
6.14 |
8.75 |
4.14 |
12.88 |
1.6 |
| Source: IIMS Dataworks (Figures in million) |
|
| |
| India’s entry-level car market is estimated at 400,000 units a year, primarily consisting of Maruti-Suzuki’s 800 and Alto and some base models of the Hyundai Santro and Maruti’s Wagon-R, cars that are priced below Rs 3 lakh to Rs 3.5 lakh on the road.
|
| |
| The Nano, which is expected to hit the market in September/October 2008, will be priced at roughly Rs 1.3 lakh (Rs 1 lakh excluding VAT and transport costs), promising to be the world’s cheapest car.
|
| |
| Several other manufacturers — Bajaj Auto, Ford and Honda among them — are also planning entry-level car launches, but they are unlikely to be at price points as low as the Nano.
|
| |
| IIMS Dataworks, a research firm specialising in retail finance markets, conducted the survey between December 2006 and July 2007 before the Nano was displayed.
|
| |
| The Invest India Incomes and Savings Survey 2007 focused on a wide range of product categories with a car being one of them. Participants were asked to select items out of a detailed list that they wanted to own over the next 12 months.
|
| |
| The immediate potential demand for a car at 1.6 million units is based on non-car owner respondents who were asked whether they were aspiring to buy a car — any car — in the next 12 months.
|
| |
| The survey had a sample size of 1 million households, extrapolated to 215.9 million households in India with at least one earner.
|
| |
| The survey analysis suggests that the potential buyers of cars are households with an annual income of Rs 2 lakh and above that do not own a car.
|
| |
| The analysis considers all households that can afford a small car and do not currently own a single car. According to the survey, which had a sample size of nearly a million households, over 12.88 million households out of the 19 million households with annual income above Rs 2 lakh currently do not own a car (either new or second hand).
|
| |
| “In the case of households with annual income between Rs 1.5 lakh and Rs 2 lakh, there are 10 million households that own a two-wheeler, but do not currently have a car,” said Sandeep Ghosh, executive director, IIMS Dataworks, adding that it is unlikely that there will be many households with high incomes who do not own a car.
|
| |
| The survey shows nearly 55 per cent of the 1.6 million demand is expected from rural India and smaller towns, with the near-term demand from the six super metros estimated at 0.25 million. Within this, as many as 0.8 million non-car households, who were planning to buy only a two-wheeler may now aspire for a car due to the lower price point for a car like the Nano.
|
| |
| If one were to assume that no household, with annual income above Rs 5 lakh would buy a small car, the near-term demand estimate is still very high at over 1.26 million units. |
| |
Content Guide
