Pricing Critical in the Cost-Conscious Indian Automotive Market

PALO ALTO, Calif.--Sept. 8, 2004--The growing demand for economy-range cars has compelled manufacturers in the Indian automotive market to provide cars at every price point. Passenger cars, especially those in segment 'B' ($6,700 to $11,000), are the fastest selling. Automobile manufacturers are also currently trying to make them affordable to segment A (below $6,700) buyers.

New analysis from Frost & Sullivan (http://www.automotive.frost.com), Forecast of the Indian Automotive Industry, reveals that this industry generated revenues totaling $14.3 billion in 2003. Total market revenue expects to reach $15.73 billion in 2010.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the Forecast of the Indian Automotive Industry - then send an email to Melina Gonzalez- Corporate Communications at melina.gonzalez@frost.com with the following information: your full name, company name, title, telephone number, fax number and email. Upon receipt of the above information, an overview will be sent to you via e-mail.

The strategy of offering cars at every price point aims at bringing two-wheeler owners into the 'potential car buyer' category. It helps manufacturers reach more potential customers, especially since it has been established that a household earning more than $5,000 per annum can afford a passenger car.

"According to the recent Asian Demographic Review, the number of households earning more than $5,300 per annum is likely to increase by 14.5 million during financial years of 2002 to financial year 2007," elaborates Frost & Sullivan Research Analyst Sindhu Nair. "This creates a larger market for passenger car manufacturers."

To cash in on the opportunities presented by this expanding end-user market, manufacturers introduced a slew of models such as General Motors Corsa Sail, Chevrolet Optra, Hyundai Santro Xing, Tata Motors Indigo and Toyota Corolla and Camry in 2003.

Although these product launches are likely to intensify competition and affect profit margins, customers are happy with the wide choices available. The 27 percent rise in car sales in the first half of financial year 04 has helped maintain a positive overall growth rate.

"The current pace of launches is likely to be sustained, as new variants of car models are needed at more than one price point," notes Nair. "This also helps showcase novel technological or comfort features."

The wider choice and easy availability of models, along with the rising income (especially among young adults), and low equated monthly installments (EMIs) have made segment C ($11,000 to $22,200) cars more affordable. Even in the motorcycle segment, there have been numerous model launches covering various power, engine capacity, and price points in financial year 2000 to financial year 2004.

A spate of model launches, an increase in the number of participants (both domestic and foreign), and the needs to counter the pressure on margins have made it a buyer's instead of a seller's market. By investing in R&D and improving overall efficiency, manufacturers expect to compete more effectively and achieve substantial sales.

The Forecast of the Indian Automotive Industry, a part of the 9808 subscription, looks at the future of the Indian automotive industry, providing sales forecasts for the various vehicle segments - two-wheelers, passenger vehicles (including cars and multi-utility vehicles), commercial vehicles (trucks and buses), and tractors. The research also includes model level forecasts for the two fast growing segments - passenger cars and two-wheelers. Executive summaries and analyst interviews are available to the press.

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Forecast of the Indian Automotive Industry

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Keywords used in this release: Automotive Industry, Indian, Asian Demographic Review, General Motors Corsa Sail, Chevrolet Optra, Hyundai Santro Xing, Tata Motors Indigo, Toyota Corolla, Camry, equated monthly installments, EMIs, two-wheelers, passenger vehicles, multi-utility vehicles, commercial vehicles, tractors, research, information, market, trends, technology, service, forecast