



As India’s economy continues to grow at a rapid pace, the automobile industry is a key beneficiary. The Indian automobile industry is currently experiencing an unprecedented boom in demand for all types of vehicles.
This boom has been triggered primarily by two factors:
Industry observers predict that passenger vehicle sales will triple in five years to about one million, and as the market grows and customer's purchasing abilities rise, there will be greater demand for higher-end models which currently constitute only a tiny fraction of the market. These trends have encouraged many multinational automakers from Japan, U. S. A., and Europe to enter the Indian market mainly through joint ventures with Indian firms.
The main factors behind such growth are the increasing affluence of the average consumer, overall GDP growth, the arrival of ultra-low-cost cars, and the increasing maturity of Indian original equipment manufacturers (OEMs).
Allowance of 100% FDI in Indian auto industry in 2002 made the industry easily accessible and attractive for the global players. Japanese, Korean, European, and American OEMs entered the Indian market and added more than 1 Million four-wheelers during 2005-06.
Indian 2-wheeler industry is the second largest in Asia after China. The production of 2-wheelers grew at a CAGR of 14.6% from FY2001 to FY 2006. In passenger car segment, most of the Indians still prefer fuel-economic compact cars, but rise in disposable incomes has opened the roads for luxury cars too in India.
Despite impressive growth, automobile penetration rate is still low in India. As India is an economically growing country, there exists a huge untapped growth potential for the automobile manufacturers.
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