India to Surpass Japan as No. 2 Asian Car Market by 2016

A worker inspects a Land Rover Discovery on the production line at their Production Facility in Solihull
Land Rover REUTERS

India will surpass Japan as the No. 2 vehicle market in Asia by 2016, according to a Wall Street Journal report based on data and research from IHS Automotive. The report also says auto sales in China, Asia and the world's largest market, will continue to grow steadily through the rest of the decade.

According to IHS Automotive, China will post sales of 30.68 million annual vehicles by 2020. That's up an astounding 74 percent from the 17.66 million sold last year. IHS' research only includes cars and light trucks, and does not include buses or trucks.

This year, sales in China are expected to climb to 19.21 million vehicles, helping China surpass the entire struggling market of Europe, which will end up with combined sales of 18.15 million, according to IHS.

Meanwhile, sales in India will peak at 4.88 million vehicles by 2016, a healthy increase from 2.91 million last year. The burgeoning market is expected to post sales of 6.73 by the end of the decade.

Japan's sales, on the other hand, will fall by the end of the decade, according to IHS. The market had only 4.13 million sales last year, when production and supply was stunted by the Japanese earthquake and tsunami and floods in Thailand. Those sales are expected to rebound this year to 5.19 million. But IHS projects sales of 4.51 million vehicles in Japan by 2016 -- when India is projected to surpass it -- and those sales will shrink somewhat to 4.35 million in 2020.  

India is seen as a rising market in the automotive world, something the IHS research confirms. Back in January, Tata Motors made headlines when it decided to skip the 2012 North American International Auto Show in Detroit and instead attend the Auto Expo in New Delhi, India. Both events were held in the same week.

Analysts said the dropout was shrewd for Tata brands Jaguar and Land Rover, which both had a better chance of standing out in a smaller show in India instead of blending in with the rest of the Detroit glamor.

It is one of the economies that is picking up, Ivan Drury, an analyst at Edmunds.com, said of the Indian auto market. It makes sense that they would opt out of Detroit's show. It makes sense for an Indian company to focus more over there.

For automakers with niche stuff, it's about who buys cars in the area, Drury added. And, is that area really picking up in sales? If you're focusing on a market that's expanding, that's the way to go. But in a flat or contracting market, it's not an effective way to spend advertising dollars.

IHS also expects Toyota Motor Corp. to stay as the top automaker in Asia, projecting 5.4 million vehicle sales in 2020. That's an increase from 4.2 million last year. It would be close, but General Motors Co. could lose its No. 2 spot to current No. 3 Volkswagen AG.

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