India’s automotive sales surged at the second-fastest rate in the world in 2017, with total numbers exceeding developed markets like the UK and France and coming within striking distance of Germany.

India closed the last calendar year with sales of 3.61 million units — a growth of 8.8% and putting India in fifth
spot in the world behind China (25.8 million), the USA (17.23 million), Japan (5.16 million) and Germany (3.71 million).

Sales in the UK were at 2.9 million units, and in France 2.54 million units (Brazil was the world’s fastest-growing automotive market, with a 9.4% year-on-year rise to 2.16 million units).

From a gap of 378,000 units between itself and Germany in 2015, India is now just 96,000 units behind the latter in terms of annual sales, and it is expected that India will overtake Germany by end of this year, on the back of sustained demand for compact hatchbacks and sports utility vehicles (SUVs).

However, in terms of value India is far behind the developed markets, including Germany. Compact cars (under 4m long) make up 75% of India’s passenger vehicle demand, which is more than most other developing and developed markets in the world.

On the other hand, Germany’s market is dominated by premium and luxury brands such as Volkswagen, Mercedes, BMW and Audi. That said, in India there are only 32 vehicles per 1,000 people, compared to around 800 vehicles per 1,000 people in the USA, formerly the world’s biggest vehicle market.

This is the reason why new mass market brands such as Peugeot, Kia and China’s SAIC have announced plans to enter India by 2020. Suzuki Motor Corporation, the parent company of Maruti Suzuki India Ltd, says it expects India’s car market to become the third-largest in the world by 2020.