The contribution of the Indian automotive industry to the country's manufacturing production and employment generation has always been a good measure of how well the economy is performing. India is the largest tractor manufacturer, second-largest bus manufacturer, and third-largest heavy truck manufacturer across the globe, which makes it hold a strong position in the global heavy vehicles arena.
Despite the ongoing post-pandemic difficulties, the Indian automobile sector appears to have overcome most of its obstacles. Improvements such as Global supply-chain rebalancing, government incentives to boost exports, and technology disruptions will aid in the creation of opportunities throughout the automotive value chain. According to Invest India, the automobile industry of India manufactured over 22.7 million vehicles in 2020, including passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers, and is cited to be the world's third-largest automotive market in terms of volume by 2025.
With passenger vehicle demand remaining strong despite rising commodity prices, many automakers are eager to embrace new technologies, particularly in the electric mobility arena, which is projected to see a series of launches in both four- and two-wheeler categories in the coming years.
Solid Foundations Will Drive the Growth of the Automotive Industry
Economic factors, consumer preferences, government policy, globalization, and technological advancements are the major drivers which cause an overall impact on the automotive sector. Demand is also predicted to be strong due to rising middle-class income. The Indian automobile industry benefits from a variety of variables, including low-cost trained labor, strong R&D centers, and low-cost steel production. In addition, the industry provides excellent investment opportunities as well as direct and indirect employment opportunities for skilled and unskilled individuals, which is also propelling the industry's growth.
Market Structure and Competitive Landscape
By 2030, India has the potential to be a global leader in shared mobility, paving the way for electric and driverless vehicles. Over the next 10 to 15 years, the mobility landscape will fundamentally change with the trend of autonomous driving, connected cars, electrified vehicles, and shared mobility, further amplifying their influence. The changing market dynamics offer Indian automakers a unique opportunity to spearhead disruptive innovations across categories and achieve a competitive advantage. In September 2021, The Indian government also announced a Production Linked Incentive Scheme (PLI) scheme for automobiles and auto components amounting to US$ 3.49 billion.
Companies will succeed by integrating technology and analytics into their operations. There are a few trends that will shape the car industry's future in an ever-changing landscape.
- The adoption of digitalization is driving the usage of platforms like social media and advanced technologies like Augmented Reality (AR) and Virtual Reality (VR) to add value to the customer experience. Vehicle manufacturers should use the customer-centric approach of digital transformation to provide post-sales service engagements.
- The booming market of electric vehicles coupled with government initiatives provides the opportunity for corporations and enterprises to rethink their mobility and embrace greener fleets using EVs and PHEVs. This will aid in cost reduction and meeting their sustainability goals in the long run.
- Telematics allows for navigation, safety, security, and communication while also providing vital data on the fleet's performance. The ability to integrate Telematics and data for optimization of enterprise fleets is making telematics one of the fastest-growing trends in the industry.
- Many people have discarded their old cars since the scrappage policy went into effect. During the purchase of a new automobile, such customers are provided incentives. This action could signal a rise in market demand for new vehicles.
- As a result of greater digitization, consumers have become accustomed to doorstep delivery for consumer products such as groceries. We can expect a similar trend in large-ticket purchases such as automobiles in the coming years. Several mobility businesses have already begun to sell their products directly to customers (D2C).
Electric Vehicles are the Next Big Thing
Electric vehicles (EVs) are at the vanguard of a massive shift in the global automobile industry. It is gradually becoming the favored choice for consumers because of reduced emissions and vehicle operating costs. With growing EV usage, it is projected that manufacturing costs will decrease, newer battery technologies will be available, and charging infrastructure will improve. The Union Cabinet approved INR 26,058 Crore PLI scheme in September 2021 to boost the local manufacture of electric and fuel cell vehicles as well as drones in India. The Government of India also introduced the battery-swapping policy to boost the sales of electric vehicles. From driverless cars to voice controls, electric automobiles are being incorporated with AI and powered by hydrogen fuel cells. As a result of the push, green hydrogen will become more appealing and sustainable. During the next few years, electric vehicles will lead the charge in propelling India to the forefront of the automotive industry. Electric, sustainable, renewable, cost-effective, and technology-driven vehicles will drive the future of the automobile industry.
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Co-founder and Director at RationalStat
Ujjwal is a thought leader and recognized expert in the market research and consulting field. He is the co-founder at RationalStat, a leading global market research & procurement intelligence firm with 10+ years of industry expertise.