Indian Car Sales To Overtake Chip Shortage And Coronavirus Stricken Germany’s; Report

Maruti Suzuki Alto cars to be exported out of India (Photo credit SAM PANTHAKY/AFP via Getty Images)

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More cars will be sold in India this year and next than in Germany, thanks to European shortages in semiconductors lasting into the first half of 2022 and the latest version of the coronavirus now causing much disruption to sales in Europe, according to a report by the Center for Automotive Research (CAR).

Don’t expect a full-throttle global recovery until 2023.

Over the years, the automotive industry has traditionally battled overcapacity and seen its profitability threatened by manufacturers seeking to offload a surplus of vehicles sometimes at any price. Now, as demand has revived following the long coronavirus shutdown, the reverse is true, as buyers clamour to replace old vehicles and find supply thin and long waiting lists.

Not surprisingly, profits for mass car makers like VW crumbled as sales dived, but paradoxically premium manufacturers like BMW, Mercedes and Tesla

were able to concentrate on selling high margin cars and SUVs. High demand meant little pressure to cut margins to encourage sales and overall profits were boosted.

Duisberg, Germany-based CAR said global sales will rise 3% this year to 70.5 million after falling 14% the previous year. Sales in Germany will slide 8% to 2.7 million, while India’s will jump 20% to 2.9 million. Sales in the U.S. will gain 4% to 15 million and China’s will be up 2% to 20.2 million.

The pre-pandemic peak of 79.7 million won’t be achieved by 2023, but this might be approached in 2025.

Things will start to turn around next year as German sales advance to 3 million, U.S. and China rise 5%, while India slows to 5% growth and 3.1 million.

Electric cars will give a big boost to German sales in 2023.

“It’s (the global car market) currently a rare phenomenon. The supply side of the market is paralyzing. Overcapacity has caused problems in the last 30 years. There are currently production downtimes due to the side effects of the coronavirus pandemic, delivery bottlenecks for semiconductors, logistic turbulence, and increases in raw material prices. A full recovery is unlikely to take hold until 2023,” CAR director Professor Ferdinand Dudenhoeffer said.

“Only in the 2nd half of 2023 can one expect strong double-digit growth in the German car market,” Dudenhoeffer said.

“It remains to be seen whether Germany can overtake India again. In 2023 the supply backlog in Germany will be resolved, while with the average age of German cars and SUVs more than 10 years, high new vehicle sales are expected and electric cars will driving the wave of renewal,” he said.

Meanwhile, the total value of German car sales is likely to remain well ahead of India’s for a while yet.

Maruti Suzuki has close to a 50% market share in India, followed by Hyundai Motor India, Mahindra & Mahindra, and Tata Motors.