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<\/a><\/p>\nA new trade deal has potentially unlocked India but barriers remain<\/p>\n
Facing a flat market in Europe, falling sales in China and a fragile situation in the US, UK car makers are looking hungrily at a huge market that is predicted by some to be on the cusp of explosive growth.<\/p>\n
India has always been a tough prospect, particularly for premium makers, because of extremely high tariff barriers for\u00a0those wanting to export cars there. But an agreement reached between the UK government and India to reduce tariffs on \u2018high-end\u2019 cars<\/a> from 100% to 10% suddenly brings the world\u2019s most populous market into play.<\/p>\n \u201cThere’s a lot of wealth there, but the premium and luxury car market has been very suppressed,\u201d Adrian Hallmark, CEO of Aston Martin<\/a>, told the SMMT Summit in June. \u201cA [tariff] reduction of that size for UK-based manufacturers is really quite significant. It would put all the luxury British brands in a position where we\u2019re in almost the same price category as high-spec premium cars.\u201d<\/p>\n Last year India imported cars worth the equivalent of \u00a355 million from the UK, with Indian-owned JLR accounting for the bulk of that. It sounds a lot but India didn\u2019t even make the top 10 of countries the UK exported cars to last year. In fact, it accounted for less than 1% of the total.<\/p>\n The trade deal, once signed, will improve that. The final deal will be subject to a quota, with a similar arrangement for cars exported from India to the UK. Exports will include the upcoming Suzuki e-Vitara<\/a> and related Toyota Urban Cruiser<\/a> small electric SUV.<\/p>\n On paper, India is an extremely promising market. The country\u00a0has the highest growth rate in the G20 countries and it is expected to remain above 6% over at least the next five years, according to UK government forecasts.<\/p>\n The country recently became the fifth largest economy in the world, overtaking the UK, and is expected to grow to the third largest by 2028.<\/p>\n Meanwhile, India-based Tata Motors forecasts that passenger car sales will rise to six million by 2030, up from 4.3 million in the last financial year ending March.\u00a0<\/p>\n The country still has an incredibly low number of cars per capita at just 32 for every 1000 people in the country, according to Tata figures, compared with around 300 for China.<\/p>\n Tata is sure where the growth will come from. \u201cThe key driver will be, of course, the high-consumption households,\u201d Shailesh Chandra, managing director of Tata Motors passenger vehicles, told analysts at the company\u2019s investor day in June. \u201cYou’re going to see rich and super-rich \u2013\u00a0people who really buy the cars \u2013 grow two to three times in the next five to six years.\u201d<\/p>\n Tata-owned JLR already understands the luxury market in the country. On its own investor day in June, the UK-based company said it had sold all 12 of a \u00a3500,000 \u2018Masara\u2019 India-only special edition of the Range Rover<\/a>, inspired by a blue rare sapphire from the Himalayas.<\/p>\n \u201cThe first eight sold before we even showed the car at the Range Rover House,\u201d said head of the Range Rover brand\u00a0Martin Limpert. \u201cWe had customers lined up that said: \u2018No matter how it looks, I want one.\u2019\u201d<\/p>\n The Range Rover House is another targeted device to persuade India\u2019s super-rich to join the owners\u2019 club. It is built on the coastal resort of Alibaug and visitors can stay for a whole day for \u201ca modern luxury experience at an exclusive luxury villa\u201d, according to the website.\u00a0<\/p>\n The dramatic drop in tariffs, once ratified, will unlock a broader market for UK luxury brands in India. Earlier in July, Bentley<\/a> announced it would team up with parent Volkswagen Group\u2019s official entity in India to create Bentley India, with three new dealers coming to three key cities. The company didn\u2019t refer to tariffs but said the shake-up of its operations there represents \u201ca new era of growth\u201d.<\/p>\n For the mass-market, however, the country remains a hard nut to crack for European car makers. For a start, Maruti-Suzuki has 40% of the passenger car market locked out, with almost 900,000 sold in the first six months of the year, according to figures posted by data aggregator bestsellingcarsblog.com<\/a>.<\/p>\n Behind the Indo-Japanese giant, local player Mahindra has made big strides to become the number-two maker, with 14% of the market this year, and Hyundai and Tata are close behind. Toyota and Kia are currently running at half their pace, at around 7% share apiece.<\/p>\n Best of the rest is Skoda<\/a>, at less than 2% of the market.<\/p>\n