India is the only growth market for autos globally: S&P Global Mobility

Moody's Investors downgrades global outlook for auto to negative from stable

India's auto market has emerged as an outlier even as all the major auto markets except China have seen a single to double-digit decline in the first eight months of the current calendar year, according to S&P Global Mobility. The sales forecasting and research arm of S&P expects the trend to continue in the remaining months of the year and even in 2023. 

"India has seen incredible growth which we believe will continue till the end of the year and also next year. India is now the no.1 market in the world in terms of volume growth. Its driving the world growth story for light vehicles (includes cars and light commercial vehicles below 6 tonnes) and leaves behind the top markets including Japan, Germany, Brazil and France this year," Guillaume Lembrez- Managing Director at S&P Global Mobility for Europe and Asia Pacific regions, told Business Standard. Paris-based Lembrez was in India recently to meet the global and Indian automakers and their suppliers.

The decline in other markets, he pointed out, has been triggered by the global shortage of semiconductors. While the semiconductor shortage did dent India sales, the impact was relatively lower. He attributed it to a higher demand for top-end trims, which require more chips, in other markets compared to India. Therefore, even though India has recovered, the mature markets continue to grapple with the chip shortage. In India, people are not as sticky about the top-end trims as in some mature global auto markets.

On Thursday, Moody's Investor Service said it had downgraded its outlook for the global automotive industry to negative from stable. It expects 2022 global light vehicle sales to be about flat (-0.7 per cent) versus 2021 and climb 5.7 per cent in 2023. This will bring sales to about 85.5 million units, well below the pre-pandemic peak of 95 million.

"This is in keeping with our macroeconomic board's reduced forecast for 2.5 per cent global GDP growth this year and 2.1 per cent in 2023 (Global Macroeconomic Outlook 2022-23, August update), on the back of substantial inflation and higher interest rates meant to tame it — both of which eat into consumers' purchasing power," it said.

In sharp contrast, India, which has emerged as the third-largest market in terms of absolute volumes, zipping ahead of Japan, has managed to buck the declining trend and is set to end the year with a record volume of 4.2 million units, breaching the previous high of 2018 at the end of 2022, as per S&P's forecast.