The Key Drivers Of The Automobile Market Are Tier-I, Iii Cities

Posted on: Jan-2018 | Automobile

The automobile industry despite various obstacles such as demonetization and GST has rapidly grabbed its momentum in this fiscal and has reported the growth of 9–10% compared to 7–8% in the last fiscal. This report was presented by Society of Indian Automobile Manufacturers (SIAM) officials. The growth of the automobile is attributed to the high demand from Tier I and III Cities.

Senior Corporate Advisor, Nissan Motor India, Arun Malhotra, and SIAM member stated that the growth of 9–10% has been until November and it is expected to remain the same this fiscal year. Small towns are drastically emerging and it is said the growth rate has been in the range of 9–10% across the country, the contribution of metro cities such as Bengaluru, Delhi, Mumbai have grown at the rate of 6% while the small towns such as Karimnagar, Amravati, Akola are drastically evolving. The key reason is the growing expenditure on automobile and having higher aspirations.

Ease in finance availability, various financial institutions expanding their network in Tier-I and Tier-III, and NBFC’s making their penetration deeper in these markets have also eased the financing process for purchasing an automobile.

About 75% of passenger vehicles and around 40% of two-wheelers are purchased through financial institutions. The implementation of GST hasn’t that impacted the auto industry, as it would only affect if there are changes related to road and registration tax. At present, registration and road tax are levied by the state.

Previously, owing to growing Internet penetration in the rural sector and small towns and the awareness among the people regarding the new product launches has resulted in growth in sales of automobiles. On the other hand, online sales have also motivated the growth of the automobile market. Consumers now rely on online reviews before choosing the cars.