India Surpasses Germany in New-Car Sales

India has surpassed Germany to become the world’s fourth-largest vehicle market in terms of unit sales, says LMC Automotive.

The London-based market research firm says car and truck sales in India climbed 8% to 3.99 million units in 2018 compared with 3.74 million vehicles in Germany, where growth was less than 1%. The Financial Times notes that some analysts predict India will overtake third-place Japan by 2021.

But they also point out the average retail transaction price for a car in India is only $7,000, roughly one-third that of more mature markets. That gap will continue to make India less lucrative in terms of revenue than many smaller-volume markets elsewhere until the country develops a more robust middle class.

Vehicle affordability has vexed multiple carmakers from developed countries to launch successful entry-level models for emerging markets. Volkswagen AG, for one, has struggled at it for years.

VW launched an equity alliance with Suzuki Motor Corp. in 2007 to create an appropriately priced car for first-time buyers in developing markets. But the partnership soured within 18 months and collapsed spectacularly thereafter without completing a single project.

Meanwhile, Suzuki’s highly successful joint venture in India with Maruti Udyog Ltd., which was launched in 1982, has captured more than 50% of India’s new-car market.

In 2017 VW’s entry-level Skoda brand abandoned an attempt with Tata Motors Ltd. to jointly develop low-cost models based on the Indian company’s AMP platform. Now Skoda is zeroing in on an entry-level car that rides on VW’s own MQB modular small-car chassis.