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India’s slowdown boosts motorbike sales

Consumer demand
By Paul Hodges on 10-Oct-2012

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.