India's Automotive Industry: Rising to Global Dominance by 2030
Exploring India's automotive industry growth, customer preferences, and electric vehicle adoption as the country positions itself as a global leader in the automotive sector by 2030.
Tuesday April 11, 2023,
3 min Read
India's automotive industry is poised to become the world's third-largest market by 2030, showcasing its dominance in the international heavy vehicles arena. As the industry contributes significantly to India's GDP and manufacturing sector, the nation is also emerging as a leader in electric vehicle (EV) adoption. This article explores the growth, trends, and export potential of India's automotive industry.
Production & Market Share
Between April 2021 and March 2022, India produced a total of 22.93 million vehicles across various categories, including passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles. India has cemented its place as the largest tractor manufacturer, the second-largest bus manufacturer, and the third-largest heavy truck manufacturer in the world. Currently, the automobile industry contributes 7.1% of India's GDP and accounts for 49% of its manufacturing GDP.
Electric Vehicle Growth & Job Creation
The EV market is expected to grow at a CAGR of 49% between 2022-2030, with annual sales reaching 10 million units by 2030. The booming EV industry is projected to create 50 million direct and indirect jobs by 2030. A market size of $50 billion has been identified for EV financing in 2030, equivalent to 80% of the current size of India’s retail vehicle finance industry, worth $60 billion today.
Sales Performance & Growth
Passenger vehicle sales reached their highest-ever level at 2,504,084 units in FY 2022-23 as of November 2022. The industry is expected to post a growth of 16% in FY23. India's trucking market is predicted to grow more than four-fold by 2050, with the number of trucks increasing from 4 million in 2022 to approximately 17 million by 2050.
Shifting Customer Preferences
A noticeable shift in customer preferences is evident as they gravitate towards larger and more powerful vehicles across all segments. In FY22, utility vehicles (UVs) among passenger vehicles (PVs) accounted for 49% of sales, up from 39% in FY21. Medium & heavy commercial vehicles (M&HCVs) among commercial vehicles (CVs) also increased, making up 33% of sales in FY22 compared to 28% in FY21.
Industry Growth Projections
India's $222 billion automotive industry is anticipated to reach $300 billion by 2026. Two-wheelers and passenger cars dominate the market, accounting for 76% and 17.4% of the market share, respectively. Small and mid-sized cars lead passenger car sales.
Exports of automobiles increased from 4,134,047 in 2020-21 to 5,617,246 in 2021-22, registering a positive growth of 35.9%. India aims to double its auto industry size to INR 15 lakh crore by the end of 2024. From April 2021 to March 2022, exports of passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers all experienced positive growth compared to the same period last year.
Government Initiatives & Budget Allocation
The Indian government has demonstrated its commitment to the industry's growth by increasing the budget allocation of the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) II by 78% in the Union Budget 2023.
All in all, India's automotive industry is set for an upward trajectory, with strong growth potential in production, sales, and exports. As the nation transitions towards electric vehicles, the industry's economic impact will further expand, solidifying India's position as a global automotive powerhouse. The ongoing shift in consumer preferences, increasing exports, and government support are key drivers in shaping the future of the industry. As the automotive market continues to evolve, India's strategic focus on innovation, infrastructure development, and sustainable practices will not only boost its economic growth but also position the country as a leading player in the international automotive arena by 2030 and beyond.