India Automobile Market

The India Automobile Market is valued at USD 120.89 Billion in 2024 and is projected to reach a value of USD 271.46 Billion by 2035 at a CAGR (Compound Annual Growth Rate) of 7.64% between 2025 and 2035.

Key Highlights of India Automobile Market

• The automobile sector is crucial for India’s economy, contributing one-third to manufacturing GDP.
• Urbanization trends, burgeoning middle-class populations, and a shift towards sustainable mobility solutions contribute to market expansion.
• The government is incentivizing EV purchases and enhancing charging infrastructure. The FAME India Scheme Phase II granted USD 696.8 million in subsidies for over 1.3 million EVs by January 2024.

India Automobile Market Government Initiatives:

• Production-Linked Incentive (PLI) Scheme:

The Indian government introduced a PLI scheme for the automobile and auto components sectors with an allocation of USD 3.5 billion. This scheme offers financial incentives of up to 18% to boost domestic manufacturing of advanced automotive technology products, effective from April 1, 2022, for five years. Recently, the scheme was extended by a year, now spanning from FY 2023-24 to FY 2028-29. A total of 85 out of 115 applications were approved, attracting proposed investments of INR 67,690 crore, surpassing the target of INR 42,500 crore.

• Electric Vehicle (EV) Initiatives:

The government is incentivizing EV purchases and enhancing charging infrastructure. The FAME India Scheme Phase II granted USD 696.8 million in subsidies for over 1.3 million EVs by January 2024. Additionally, USD 97.77 million was allocated for public fast charging stations, with 7,432 stations approved. FAMEs tenure was extended until March 2024.

• International and Domestic Investments:

The PLI scheme has attracted significant foreign investments from countries like South Korea, the USA, Japan, and more. The Indian government supports 100% Foreign Direct Investment (FDI) in the automobile sector under the automatic route.

• Biofuel and Clean Technology:

The National Policy on Biofuels was amended to advance the blending target of 20% ethanol in petrol and 5% biodiesel in diesel to 2025-26. The government also launched initiatives to produce and export clean technology vehicles with incentives worth USD 3.5 billion until 2026.

• Infrastructure and Safety:

In 2022, the government proposed a battery-swapping policy and planned to expand the National Highways by 25,000 km under the Gati Shakti Plan. Bharat NCAP, Indias vehicle safety assessment program, was also introduced to enhance safety standards.

• Semiconductor and Advanced Technologies:

Gujarat announced a semiconductor policy to establish Dholera Semicon City. Over 100 advanced technologies, including alternative fuel systems and safety electronics, were added under the PLI scheme to encourage innovation and investment in automotive technology.

Key Trends

1. Rising Popularity of Two-Wheelers: The Indian two-wheeler industry is booming due to their fuel efficiency, affordability, and suitability for navigating congested roads and limited parking spaces. The expanding middle class, a predominantly young population, and high demand in rural areas, which account for 55% of total sales, drive this growth. Sales have seen a significant increase, from 13.57 million units in FY 2021-22 to 15.86 million units in FY 2022-23, according to SIAM.
2. Surge in Electric Two-wheelers Adoption: The demand for electric two-wheelers is soaring, with sales jumping from 53,258 units in April 2022 to 86,194 units by March 2023. Government initiatives like NEMMP and FAME, along with a battery-swapping policy, have bolstered EV adoption. India is committed to reducing carbon emissions, aiming for EVs to make up 30% of new sales by 2030. As of March 2023, there are 6,586 public charging stations, supporting this rapid growth.
3. Introduction of Advanced Two-Wheeler Models: High demand for two-wheelers has led companies to focus on launching new models with advanced features and better fuel efficiency. Notable developments include Ducatis plan to introduce eight new motorcycle models and Hero MotoCorps commercial production of flex fuel motorcycles. The trend towards touring two-wheelers is also growing, with companies collaborating with clubs to promote travel.
4. Growing Popularity of Ride-Sharing Services and EVs: Shared mobility services are gaining traction due to urbanization and the demand for cost-effective transportation. The COVID-19 pandemic accelerated this trend, with more consumers preferring shared services over personal vehicle ownership. Additionally, there is a significant shift towards EVs driven by environmental concerns, government incentives, and advancements in affordable EV technology. Automotive companies are responding by launching electric models and investing in EV infrastructure to capitalize on this trend.

India Automobile Market Dynamics:

The Indian automotive market is experiencing a surge in the adoption of connected technology, integrating vehicles with internet connectivity. Several factors contribute to the growth of the Indian automotive market, including urbanization, a burgeoning middle-class population, and a focus on sustainable mobility solutions. This emphasis has driven local automakers to innovate in electric and hybrid vehicle production, attracting significant investments from international players. Despite regulatory and infrastructural challenges, these developments have expanded the markets reach, positioning India as a critical player in the global automotive landscape.

Government initiatives like "Make in India" and incentives for electric vehicle production bolster domestic automotive manufacturing. Additionally, rapid urbanization and increasing disposable income drive demand for personal vehicles. However, stringent emission standards pose challenges for automakers, necessitating alignment with global trends towards electric cars. Economic uncertainties, including fluctuating economic conditions and consumer behavior, further impact market dynamics, highlighting the need for adaptability and resilience in the Indian automotive sector.

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India Automobile Market Export Overview:

The automobile sector is crucial for India’s economy, contributing one-third to manufacturing GDP. India’s competitive edge lies in its skilled engineering workforce and cost-effective manufacturing, which attract global manufacturers like Maruti Suzuki and Hyundai, which lead in passenger car exports. In FY22, India exported 24% of its total vehicle production, including two-wheelers, three-wheelers, commercial vehicles, and passenger cars. Key export markets include the US, South Africa, and Mexico.

Government initiatives like Make in India and robust infrastructure have boosted exports. The US is a significant export destination, accounting for nearly USD 3 billion in FY22, followed by Mexico and South Africa. Two-wheelers are the largest export segment, with substantial markets in Nigeria, Nepal, and Colombia. India aims to become the largest EV market by 2030, with significant investment opportunities. Recent government policies and incentives are expected to bolster India’s position as a global leader in the India Automobile market.

India Automobile Market - Competitive Landscape:

The India Automobile market is dominated by a few key players. In passenger cars, Maruti Suzuki, Tata Motors, Hyundai, Mahindra & Mahindra, and Honda lead the market. The two-wheeler segment is controlled by Hero MotoCorp, Honda Motorcycle & Scooter India, TVS Motor, Bajaj Auto, and Royal Enfield. Both domestic and international companies vie for dominance, with established brands expanding their offerings and foreign firms like Hyundai and Toyota increasing their market share through collaborations and investments. Electric vehicle makers, such as Mahindra Electric and Tata Motors, focus on green mobility, while companies like Ola Electric and Ather Energy innovate with electric scooters, intensifying competition through cost efficiency, innovation, and sustainability.

• In January 2024, BMW made significant progress, selling 1,340 luxury cars, the biggest in that category and representing a market share of 0.34%. Similarly, Mercedes-Benz also performed well, selling 1,333 vehicles in the same period.
• In January 2024, Hyundai Motor India Limited unveiled its ambitious investment plans of USD 743.8 million (Rs. 6,180 crore) in Tamil Nadu. This includes a significant amount of USD 21.7 million, INR 180 million, for a dedicated Innovation Centre for Hydrogen Valley in association with IIT Madras, which signals a promising future for the automotive industry in the state.
• In January 2024, Hyundai Motor India Ltd. completed the acquisition and transfer of specified assets from General Motors Indias Talegaon plant in Maharashtra and signed a Memorandum of Understanding with the Government of Maharashtra, committing an investment of USD 722 million.
• In January 2024, Mahindra & Mahindra Ltd. and the India-Japan Fund ("IJF"), managed by the National Investment and Infrastructure Fund Limited ("NIIF"), entered into a binding agreement, with IJF committing to invest USD 48.1 million (Rs. 400 crores) in Mahindra Last Mile Mobility Limited (MLMML).
• In January 2024, at the Vibrant Gujarat Global Summit, Maruti Suzuki announced its investment plans in Gujarat, including a New Greenfield plant and a fourth line in SMG.
• In February 2024, TVS Mobility, a division of the TVS Group, established a collaborative partnership with Mitsubishi Corporation, a prominent Japanese conglomerate. Mitsubishi invested INR 300 crore (USD 40 million) in TVS Vehicles Mobility Solutions (TVS VMS), a recently established subsidiary, acquiring a 32% ownership stake in the venture.
• In November 2024, Toyota Motor Corporation announced the expansion of its third car manufacturing plant in Bidadi, Karnataka, India, with an investment of approximately INR 3,300 crore (USD 396 million). This would increase its production capacity by 100,000 units per annum.

The India Automobile market can be categorized as Vehicle Type, Fuel Type, and Application