Top India's Automotive Industry Trends: India Is the World’s Third-Largest Automobile Market; Explore with Spherical Insights & Consulting

RELEASE DATE: Dec 2023 Author: Spherical Insights Request Free Sample

India's Automotive Industry Trends: India Is the World’s Third-Largest Automobile Market; Explore with Spherical Insights & Consulting

Market Trends and Recent Development Overview

The Indian automotive industry has historically been a good indicator of how well the economy is doing, as the automotive sector plays a key role in both macroeconomic expansion and technological advancement. Due to a growing middle class and a large proportion of India's population being young, the two-wheeler segment dominates the market in terms of volume. Furthermore, the growing interest of companies in exploring rural markets aided the sector's growth. Commercial vehicle demand is increasing as the logistics and passenger transportation industries grow. Future market growth is expected to be fueled by new trends such as vehicle electrification, particularly for three-wheelers and small passenger automobiles.


India has surpassed Germany and Japan to become the third-largest vehicle market globally in terms of sales volume in 2023. The overall sales of the Indian automobile industry increased by 21% during the festive season of 2023 with vehicle sales amounting to 4.162 million units. Auto retail sales in India stood at 4.7 million Units in the year 2022. The Indian automotive industry produced 23.5 million passenger cars, commercial vehicles, 3-wheelers, 2-wheelers, and 4-wheelers between April 2021 and March 2022. In the International heavy vehicles arena, the Indian market holds a strong position as it is the largest tractor manufacturer, second-largest bus manufacturer, and third-largest truck manufacturer in the world. Union Road Transport Minister Nitin Gadkari said India is on track to overtake China to become the largest auto industry by 2027. His comments come at a time when India has overtaken Japan and Germany to grab the third spot in the world's largest auto market.


The following are some recent investments and developments in India's automobile sector:

1. Renault Nissan disclosed plans to invest US$ 1,68,762.86 (Rs. 1.4 crore) in infrastructure upgrades at eight schools near Chennai in July 2023.

2. Mahindra & Mahindra was in advanced discussions with British International Investment (BII) and other global investors in July 2023 to raise up to US$ 602.72 million (Rs. 5,000 crore) for its electric vehicles (EV) unit.

3. In June 2023, Hero MotoCorp announced plans to invest up to US$ 180.81 million (Rs. 1,500 crore) in India to develop premium bikes and EVs.

4. Power Finance Corporation Ltd (PFC) approved a US$76.39 million (Rs. 633 crore) loan for 5,000 passenger EVs and 1000 cargo EVs in April 2023.

5. Nissan and Renault announced plans to invest US$ 600 million in India over the next 3-5 years to increase their market share in passenger cars and electric vehicles in February 2023.

6. Tata Motors announced the launch of the Tata Altroz CNG in January 2023 at the Auto Expo 2023.

7. Mr. Ola Kallenius, Global CEO, stated in January 2023 that India was Mercedes-Benz's fastest-growing market worldwide in 2022 and that the company intends to invest more in the country.


India's Automotive Industry Is Expected To Dominate The World By 2027.

Exploring India and its automotive industry growth, customer preferences and EV adoption as the country positions itself as the global automotive leader in 2027. By 2027, India's automotive sector is expected to rise to become the largest in the world, demonstrating its strength in the global heavy vehicle market. In addition to making a substantial GDP and manufacturing sector contribution, the industry is also helping India become a pioneer in the adoption of electric vehicles (EVs).


  • Opportunity in the Automotive Industry

As the industry grows, it is important to reduce environmental impact by reducing CO2 emissions and promoting cleaner technologies. This includes the widespread adoption of electric vehicles, the development of charging infrastructure, and the promotion of sustainable production processes. Manufacturers need to develop cost-effective vehicles with fuel efficiency, low maintenance costs, and value for money. This requires constant planning, design, and manufacturing innovation to optimize costs without compromising quality and performance. The automotive sector in India functions within a rigorous regulatory structure encompassing safety guidelines, emission standards, and quality assurance protocols. Manufacturers must adhere to these laws and allocate resources toward research and development to produce automobiles that fulfill the necessary criteria. To decrease accidents and increase occupant protection, there is also an increasing emphasis on improving safety features and putting cutting-edge technologies into practice.


In summary, the Indian automotive sector confronts difficulties with affordability, sustainability, and regulatory compliance. But these difficulties also offer chances for innovation, expansion, and market leadership. In the dynamic Indian market, the industry may prosper by navigating these hurdles and meeting consumer wants, while also guaranteeing regulatory compliance and resolving environmental issues.


  • Automotive Industry Growth

The increasing adoption of technology in vehicles, industrial supply chains, and business models will change the outlook of the automotive market during the forecast period. The emergence of automated, electrified, and connected vehicles will accelerate market growth, making driving easier, safer, and more convenient. In the coming years, the market should be driven by the growing popularity of sport utility vehicles (SUVs), growing demand for utility vehicles in the logistics sector, and pent-up demand. In addition, the electrification of vehicles, especially three-wheelers and small passenger cars, is expected to be a major factor influencing the market growth in the future. The automotive industry is a highly competitive market with growth driven by factors such as increasing disposable income, availability of financing options, growing urban population, and close substitutes in each segment equipped with the best technological advancements such as active and passive safety systems, convenient features and efficient power- trains. The market is also growing due to India's dynamic public transport network and growing logistics landscape.


  • Autonomous Vehicle Growth

The Indian government is also taking action to facilitate the testing and deployment of autonomous vehicles on Indian roads. Autonomous vehicles are still in their early stages, but they are slowly becoming more prevalent in the Indian automotive sector. Automakers are investing in research and development for autonomous vehicles as a result of advances in sensor technology and artificial intelligence. Autonomous vehicles have the potential to revolutionize transportation in the future, despite ongoing infrastructure constraints and regulatory obstacles. The first firm in India to produce completely autonomous vehicles is called Minus Zero (AVs). Initiated in 2021 by two undergraduates, Gagandeep & Gursimran, it embarked on a daring endeavor to construct autonomous vehicles in India.


  • Electric Vehicle Growth

The Government of India has taken several initiatives to promote the production and adoption of electric vehicles in India to reduce emissions and develop e-mobility due to rapid urbanization. The National Electric Mobility Mission Plan (NEMMP) and faster adoption and manufacturing of hybrid and electric vehicles in India (FAME I and II) helped generate initial interest and exposure to electric mobility. By June 2021, the second phase of the FAME program has sponsored 88,479 electric cars with incentives and 7,367 electric buses have been allocated to various state/city transport companies at a total cost of INR 867 crore ($104 million). The Indian government is also providing tax exemptions and subsidies to EV manufacturers and consumers to promote the domestic electric vehicle industry. In line with the phased production proposal, the government imposed a 10% tax on imports of lithium-ion cells and a 15% customs duty on parts used to manufacture electric vehicles. Improved government policies and regulations, like no license required to operate EV charging stations in India, further aid the EV market growth. About 315,000 electric cars were sold in India in 2021, up 172% from last year's 115,000 units. Passenger car sales in India has triple to around 23,000 units in 2021 and continue to show signs of growth.


  • Commercial Vehicle Growth

The Indian government is continuously promoting the growth of the manufacturing industry in India to reform the economy after the pandemic. India's manufacturing and industrial sector has grown significantly. From FMCG (Fast Moving Consumer Goods) to automobiles, pharmaceuticals, and textiles, production and distribution requirements have increased across all sectors. To meet these demands, companies invest in their commercial vehicles, from trucks to refrigerated vans, to ensure smooth operation and timely delivery of goods.


  • Two-Wheeler Industry Growth

According to numerous senior industry officials, the pent-up demand in ruler areas which account for about 60% of two-wheeler sales nationwide is anticipated to be a major factor in this fiscal year's double-digit sales growth. According to the Society of Indian Automobile Manufacturers (SIAM), sales of two wheelers in the local market grew 16% year-on-year to 2,931,249 units in the first two months of this fiscal. Experts expect sales to grow 13.5% from 16.97 million units in FY23 to 20 million two-wheelers. Honda Motorcycle and Scooter India (HMSI) operates about half a dozen models, including two electric vehicles, with this charge aimed at increasing local volumes. In addition, Hero MotoCorp will launch about a dozen models in various segments in FY24 to increase volume and market share. As young, passionate buyers want the complete motorcycle experience, including rides, community, merchandise, accessories, and connected technologies, demand at the premium end of the market continues to outpace the overall two-wheeler market growth.


  • Three-Wheeler Industry Growth

Three-wheelers are relatively inexpensive compared to cars and motorcycles, making them more accessible to the majority of the population. Drivers prefer to use the three-wheeler taxi service as it offers a wide range of options compared to other vehicles. This is the main factor behind the increasing demand for three-wheelers in India. The Government of India has also provided various incentives and subsidies to promote the use of three-wheelers, especially for commercial purposes, which further contributes to the growth of this market. The increase in demand for last-mile deliveries and e-commerce services has increased the use of three-wheelers in India due to their compactness, ease of use, and cost-effectiveness. All these factors have made three-wheelers a popular means of transport in India, especially in urban areas. These factors are expected to drive the three-wheeler market in India in the coming years.


  • List of Top Selling Commercial Vehicles Companies In India.

1. Tata Motors.

2. Ashok Leyland.

3. Mahindra & Mahindra.

4. Bharat Benz.

5. Eicher Motors.

6. Hindustan Motors.

7. Force Motors.


  • List of Top Selling Vehicles Companies in India.

1. Maruti Suzuki.

2. Hyundai Motor Company.

3. Tata Motors.

4. Mahindra & Mahindra.

5. Toyota Motor Corporation.

6. Kia Corporation.

7. Honda.

8. MG Motor India.

9. Skoda Auto.

10. Volkswagen.


  • List of Top Selling Electric Vehicles Companies in India.

1. Tata Motors.

2. MG Motor.

3. Mahindra & Mahindra.

4. Hyundai Motor Company.

5. PSA Groupe.


  • List of Top Selling Two-Wheeler Companies in India
  1. Hero MotoCorp.
  2. Honda.
  3. Bajaj.
  4. TVS.
  5. Suzuki.
  6. Royal Enfield.
  7. Yamaha.


  • List of Top Selling Three-Wheeler Companies in India
  1. Bajaj Auto.
  2. Piaggio.
  3. Mahindra & Mahindra.
  4. YC Electric.
  5. TVS Auto.
  6. Mini Metro EV L.L.P


About the Spherical Insights & Consulting

Spherical Insights & Consulting is a market research and consulting firm which provides actionable market research study, quantitative forecasting and trends analysis provides forward-looking insight especially designed for decision makers and aids ROI.

Which is catering to different industry such as financial sectors, industrial sectors, government organizations, universities, non-profits and corporations. The company's mission is to work with businesses to achieve business objectives and maintain strategic improvements. 



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