Which car should I buy in Delhi

Cars in India - the main thing is that they are cheap and beautiful

An area ten times the size of Germany and a population of 1.3 billion people: India is a gigantic country - and it continues to grow. Around 15 million Indians are added every year, and soon it will oust China from first place as the most populous country, and in about ten years the New Delhi region could be the largest metropolis in the world. With about half as many inhabitants as all of Germany.

Auto sales are increasing rapidly

The auto industry is also developing rapidly in India, with sales figures increasing by more than 25 percent in the past five years. However, one cannot speak of a mega-market. With 3.4 million vehicles sold most recently, India just overtook Germany in 2018, but it is a long way from the USA with over 17 million vehicles; In China, another five million more sales contracts are concluded. Conversely, this means: India is an exciting market with room for improvement for the automotive industry.

Low income

However, the potential cannot be increased so easily, because anyone who wants to sell cars in India has to have one thing above all else: a very, very cheap offer. Even if the average income increases by almost 8 percent annually, it is still only around 1,800 US dollars gross - per year. Car prices are correspondingly low: half of all new cars in India cost less than 6,500 US dollars. This can only be achieved with simple technology, inexpensive production and the lowest safety standards. For most European manufacturers this is an impossible task.

Hardly any car imports

So it's no wonder that import vehicles from the west hardly appear in the car statistics. VW only appears in tenth place with around 37,000 units recently sold - Volkswagen only delivers that many vehicles to customers in Wolfsburg in a good two months. Another hurdle for foreign car manufacturers: India imposes high tariffs on vehicle imports.

In parts to India

In order to avoid the 120 percent surcharge, many manufacturers rely on so-called CKD (Completely Knocked Down) products: The cars are produced abroad, dismantled, sent in individual parts to India and assembled there in assembly plants. This lowers import duties to 80 percent, and costs can be reduced by increasing the proportion of locally produced parts. Nonetheless, most manufacturers in India are caught in a vicious circle: the market share does not increase without cheap offers, but complete production in India is not worthwhile without higher quantities.

Suzuki offshoot as market leader

The Asians, on the other hand, seized the opportunity early on to produce in India: The undisputed market leader with over 50 percent is the Indian Suzuki subsidiary Maruti-Suzuki, followed by Hyundai India, which together supply two thirds of the market. Only then do the two original local carmakers come: The fact that Mahindra only makes it to third place is mainly due to the offer, which consists exclusively of more expensive SUVs and off-road vehicles. Tata is in fourth place, but only has a 7 percent market share. The manufacturer was once ahead of the game and launched the Nano 2008, the cheapest car ever.

But that is exactly where the problem lies: with the Nano, which costs only 1700 US dollars, the carmaker has lost its reputation, the quality was even unsustainable for India. In addition, for a long time, the manufacturer did not attach much importance to design. But in the interests of Indian buyers, that takes precedence over security, comfort or space.

Tata is working on the image

But everything should get better: Tata took over the English company Jaguar Land Rover in 2008 and G√ľnter Butschek, an experienced auto manager, has been in charge since 2016. Butschek worked for Mercedes-Benz for a quarter of a century and is now trying to pull the Tata cart out of the mud. That means: new models. The recently introduced Harrier shows where the journey is headed: The Land Rover-based SUV looks good and, as the flagship of the brand, is intended to give the brand new impetus. Equipped with six airbags, ESP and an infotainment system, the Harrier, which costs around 18,000 US dollars, is in a price range that most people cannot reach. But the carmaker promises more, cheaper models. Then things should finally go up again with Tata.

No more combustion engine from 2030

From 2030, according to the government's plan, cars with internal combustion engines will no longer be registered in India. A noble destination for a country that is still in its infancy in terms of automotive technology. Of course, it would be easy to import e-cars. But even the cheapest electric vehicle from abroad would hardly be affordable in India. A problem that does not only apply to the electric drive.

Published in the Economics section