India has overtaken Japan to become the third-largest auto market in the world, according to the latest industry data. Preliminary results indicate that India's new vehicle sales totalled at least 4.25 million units in 2022, topping Japan's sales of 4.2 million. New vehicles delivered in India totalled 4.13 million between January and November, with December's sales bringing the total to roughly 4.25 million. India's sales volume is expected to rise further with the inclusion of fourth-quarter sales figures for commercial vehicles, along with year-end results yet to be released by Tata Motors and other automakers.
China continues to lead the global auto market, with 26.27 million vehicles sold in 2021, while the US remains second at 15.4 million vehicles. India's auto market has fluctuated in recent years, with roughly 4.4 million vehicles sold in 2018, dipping below 4 million units in 2019 due to a credit crunch in the non-bank sector. When the Covid pandemic triggered a countrywide lockdown in 2020, vehicle sales plummeted further below the 3-million-unit mark. Sales recovered in 2021 to approach 4 million units, but the shortage of automotive chips weighed on growth.
Gasoline-powered vehicles, including hybrid vehicles, accounted for most of the new autos sold in India last year, with electric vehicles having a limited presence. Autos for the Indian market are seen as having fewer semiconductors than those sold in advanced economies. The easing of the automotive chip crunch in 2022 provided a springboard for recovery, with Maruti Suzuki, Tata Motors, and other Indian automakers seeing sales growth last year.
India's population is expected to outstrip China this year and continue growing until the early 2060s, with incomes rising as well. Only 8.5% of Indian households owned a passenger vehicle in 2021, meaning there is plenty of room for sales growth. The government has started offering subsidies for electric vehicles amid a trade deficit resulting from petroleum imports.
In contrast, Japan's auto sales peaked in 1990 at 7.77 million units, meaning sales have tumbled by nearly half from the all-time high. The country's declining population offers little prospect for a significant recovery in sales in the foreseeable future. Japan's auto sales fell 5.6% to 4,201,321 vehicles in 2021 due to the omicron epidemic and the lockdowns in China that greatly undercut production, leaving automakers unable to meet demand. China surged past Japan to become the second-largest auto market in 2006 and overtook the US to become the world's largest market in 2009.
