Ouchmytoe Auto

Despite promising high returns, the burgeoning auto markets of China and India carry high credit risks for foreign automakers, says a report published by Standard & Poor’s Ratings Services. Yet, multinational car manufacturers might look at this as an opportunity. In India and China, with populations of more than a billion each, fewer than 20 in 1,000 driving-age inhabitants owned a car in 2006.

This compares with 900 car owners per 1,000 inhabitants in the US. With purchasing power forecast to grow above 10% per year in China and by more than 7% per year in India over the next five years, car sales are expected to grow enormously.

China’s auto sales show no signs of running out of gas. The report expects sales to grow by at least 10%-15% per year on average over the medium term, and forecasts by JD Power and Associates suggest that China could overtake Japan to become the world’s second-largest automotive market as soon as 2007. Competition in the Chinese auto industry is more intense than in India, which is still dominated by a few large players — Maruti Udyog, Hyundai Motors and Tata Motors. More

Courtesy: Indiacar.net