India’s slowdown boosts motorbike sales

India autos Oct12.png95% of Indian households do not own a car. And as the chart above shows, motor cycles remain the key market for manufacturers. 2011-12 annual figures have now been published, and they show:

• 70% of sales were motorbikes (light blue), versus 66% in 2010-11
• Car sales (purple) were steady at 14%
• Overall, bike sales jumped 14% to 13.4m
• Car sales were up just 4% to 2.6m

The reason for the gain in bike sales is India’s slowing economy, coupled with the high price of gasoline. It is a very poor country, ranking 140th in the world in terms of GDP/capita at just $1389/year last year. Car sales in August were down 4% at 185k as a result.

This is why Nissan’s move to develop a car that sells for $3k is potentially so important. Indians do not like riding around with the whole family sitting on a motor-bike. It is dangerous, uncomfortable and can often mean they get both dirty and wet.

The company that creates a car they can afford will do very well indeed. After all, if 10% of bike owners were to swtich from a bike, then the car market would expand by 50%. That is the size of the opportunity.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.

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