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Solid growth in the global car market in 2015
Jan 27, 2016

One of the factors that gives an indication of the health of any global economy is the sale of automobiles. So in this regard, how have the countries fared in 2015?

One way to analyse this is by looking at the new registrations for passenger cars. As reported in The Economist, and evident from the chart below, the results paint an interesting picture.

Take Europe for instance. The EU countries are battling high debt, prolonged recession and rising unemployment. And yet, growth in the car market was quite strong in countries such as Spain and Italy.

China is another interesting point. Growth in the car market in the dragon nation has considerably slowed. It must be noted that China is largely a luxury car market as compared to India, which is more of a small car market. And the growth of luxury cars in China has particularly been hit hard on account of the turmoil in the Chinese economy and its stock markets. This was evident in the results of Tata Motors' Jaguar Land Rover (JLR) operations as well. Indeed, for JLR, China was a very important market and had witnessed robust growth in prior years. Thus, the contribution from China to JLR's revenues rose steadily over the years. This changed last year when the crisis in the country hit the volumes very hard, thereby impacting JLR's overall performance in the market.

The Indian car market has also been slowly limping back to recovery although some segments of the industry remain weak. But volumes will likely jump up once the Indian economy starts growing at a faster pace.

By the way, our colleague, Vivek Kaul, who takes a close look at the economy in his Diary, shared some very compelling statistics on passenger car sales and its relevance to investors, in the latest Equitymaster Conference. In case you have missed listening to him in person, you can get online access to the video recordings of the Equitymaster Conference 2016.

Data source: The Economist

This Chart Of The Day was published in The 5 Minute WrapUp - Do You Believe in This Investment Myth?

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