AUTOMOTIVE SECTOR OVERVIEW
Statistics, news & updates: everything you need to know about the Automotive Industry in India
Summary/Snapshot
Automotive Industry
- In January 2024, the total passenger vehicle sales reached 3,93,074. Passenger vehicles saw the highest ever sales in the month of January posting a growth of 14% compared to January 2023.
- The auto component industry accounts for 2.3% of the National GDP and 25% of the manufacturing GDP. 25% of the total manufacture of auto components parts is exported.
- 100% foreign direct investment (FDI) under the automatic route is allowed in this sector.
- India’s automobile industry is the fifth-largest auto market and seventh-largest manufacturer of commercial vehicles.
The Government of India expects the automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023.
The government introduced a battery swapping policy, which will allow drained batteries to be swapped with
charged ones at designated charging stations, thus making EVs more viable for potential customers.
Growth Drivers
- The new voluntary vehicle scrappage policy will drive demand as old and unfit vehicles are phased out.
- Setting up R&D centres at a total cost of US$388.5 million to be on par with global standards.
- The electric vehicle (EV) market is estimated to be a US$ 7.09 billion opportunity in India by 2025 and will create 5 crore jobs by 2030.
- Setting up R&D centres at a total cost of US$388.5 million to be on par with global standards.
Sub industries
- Auto parts & equipment – includes Tyres
- Automobile
Opportunities
- India could be a leader in shared mobility by 2030, providing opportunities for electric and autonomous vehicles.
- The focus is shifting to electric vehicles to reduce emissions.
- The electric vehicles industry is likely to create five crore jobs by 2030.
- Low-cost automation and large internal market.
- Proximity to other Asian and emerging markets.
- Frugal/lean engineering capability.
Challenges
- Not-so-easy transition to the electric powertrain.
- Companies have to meet the demands of technology and government in order to cater to changing social preferences in a changing regulatory environment.
- Tax structure – especially the disparity in custom and excise duties on raw materials and finished automobiles.
- The unavailability of resources at a reasonable cost, e.g., Power, Skilled Labour, Technology.
Key Investment Opportunities
- Passenger vehicles: passenger cars, utility vehicles, multi-purpose vehicles.
- Two-wheelers: mopeds, scooters, and motorcycles.
- Three-wheelers: passenger carriers, goods carriers.
- Commercial vehicles: light commercial vehicles, medium and heavy commercial vehicles.
- Huge demand for low-cost electric vehicles that are suited for safe short-distance urban commutes (averaging 50-100 km/trip) that are rugged enough to perform reliably through India’s summers and monsoon.
Recent Developments
- Future of connectivity: The mobility landscape will fundamentally transform over the next 10 to 15 years, with ACES trends—autonomous driving, connected cars, electrified vehicles, and shared mobility—amplifying their impact.
- Focus shifting on electric cars to reduce emissions.
- The government aims to transform India into an R&D hub.
- By 2030, the Indian government has committed that 30% of the new vehicle sales in India would be electric.
- Scrappage policy: Vehicle scrappage policy is recently launched to scrap old vehicles and reduce pollution. It expects to cover 51 lakh Light Motor Vehicles more aged than 20 years and 34 lakh Light Motor Vehicles above 15 years of age. This policy aims to reduce environmental pollution by phasing out old or unfit vehicles running without a valid fitness certificate. This move will increase demand for new cars in the market.
Key Players in India
National
- Tata Motors Ltd.
- Mahindra & Mahindra Ltd.
- Maruti Suzuki India Ltd.
- Hero MotoCorp Ltd.
- Bajaj Auto Ltd.
- Ashok Leyland Ltd.
- Sundaram Clayton Ltd.
- TVS Motor Company Ltd.
- Eicher Motors Ltd.
- Force Motors Ltd.
International
- Toyota Motor Corporation
- Volkswagen Group
- BMW
- Tesla Inc.
- Ford
- Nissan
- Mercedes-Benz
- Bolwell
- Automobili Lamborghini S.p.A.
- Aston Martin Lagonda Limited
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