Current trends in the Indian automotive sector


India’s auto industry has traditionally been a good indicator of the health of the economy. Despite numerous challenges such as soaring crude prices, semiconductor shortages and supply chain disruptions, the automotive industry is showing signs of reaching pre-pandemic sales volume levels. . In fact, there has been a substantial shift in consumer outlook over the past two years, however, demand is still strong, especially in the passenger vehicle segment. Moreover, the demand for commercial vehicles is also on the rise, due to the growth of the logistics and passenger transport sector. Emerging trends such as vehicle electrification, especially three-wheelers and small passenger cars, are expected to drive the market growth in the future.

Much of the credit goes to the government initiatives and supporting policies such as Automotive Mission Plan 2026, Scrapping Policy, and Production Related Incentive Scheme influencing the current market growth and expected to drive the Indian automotive sector in the coming years.

Against this backdrop, here are some emerging trends that will continue to impact and influence the Indian automotive industry:

Digitization: Direct sales and better customer experience

Over the past two years, there has been a sea change in the way customers want to interact and make a purchasing decision. With increased digitalization, consumers are used to having goods delivered to their doorstep, which is driving more and more businesses to think digital first. While this is common for consumer goods and groceries, automotive purchases are also expected to see the penetration of this trend in the coming years. To support this trend, several automakers are testing new online business models to bring their products directly to consumers. Additionally, automakers and dealerships are leveraging new technologies to deliver a more personalized customer experience, from request to delivery, and better engage with them, even in after-sales services like maintenance and repair. insurance.

Increased vehicle connectivity

As technologies such as artificial intelligence, virtual reality and the Internet of Things (IoT) continue to grow, more connected services and features are expected in vehicles. Integrating technology into automobiles has various advantages. For example, connected cars can improve communication with other vehicles, communicating bi-directionally with a range of other systems to send data for remote diagnostics and vehicle health reporting. In addition, the connected function also helps maintain optimum speed and facilitates early detection of emerging collisions, thus avoiding breakdowns and also avoiding accidents. Currently, the connected car market in India is still in its infancy, but it is expected to grow over the next few years.

Electric vehicles: a growing reality

India is witnessing a huge disruption in the EV segment. Central and state policies to support electric vehicles, as well as the FAME subsidy, have generated new interest from car buyers. Interestingly, electric vehicles have captured a bigger market in all segments – two-wheelers, compact SUVs and even luxury vehicles. However, it is the two-wheeled electric vehicle category that is gaining consumer interest and acceptance across all regions. Apart from electric vehicles, the Indian government is also encouraging the adoption of hydrogen cars. In view of the support from the government, it is expected that large commercial vehicles like buses and trucks will be the first to make this transition. We believe that electric vehicles and hydrogen have the potential to bring about a noticeable change in the Indian automotive sector over the next decade.

Hybridization in vehicles

Hybrid vehicles are gaining popularity these days. Since EV infrastructure is at a nascent stage, a hybrid vehicle is a promising alternative for the IC engine. The hybrid vehicle offers many advantages, including fuel economy, a reduced carbon footprint, a regenerative braking system and, of course, a good resale value. Technology adoption has been somewhat subdued so far due to high prices. OEMs are betting high in the space again with new launches and attractive pricing.

Growing demand for CNG vehicles

Rising fuel prices and limited charging infrastructure for electric vehicles have accelerated demand for CNG vehicles across the country. According to Bank of America, CNG penetration in the PV segment in FY22 increased from 6% in FY21 to 9%. It costs almost half the price of gasoline, which significantly reduces the cost of running a CNG vehicle with better fuel efficiency and, moreover, it is environmentally friendly. As more and more customers are looking for a passenger vehicle in the mid-price segment, several major OEMs have turned to CNG-equipped vehicles.

These emerging trends, along with supporting government policies and initiatives, are poised to further revitalize the growth of the Indian automotive sector. Additionally, new and emerging technologies can further contribute to establishing sustainable manufacturing processes and creating job opportunities in the automotive industry. It is imperative for the industry, both OEMs and the supply chain, to keep up with these emerging trends to meet customer expectations and stay ahead of the competition.



The opinions expressed above are those of the author.



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