Indian auto industry poised to reach USD 300 Billion by 2026; Revving up for innovation and expansion

New Delhi [India], April 27 (ANI): India’s rapidly growing auto market is poised to hit a milestone, with projections indicating it will reach USD 300 billion by 2026. This growth is fueled by various factors, including rising income levels, urbanization, and a burgeoning middle class with increasing purchasing power.

In March 2024, the Indian auto industry produced a total of 2,325,959 units, covering Passenger Vehicles, Three-wheelers, Two-wheelers, and Quadricycles.

Passenger Vehicles accounted for 368,086 units, Three-wheelers saw 56,723 units, and Two-wheelers dominated with 1,487,579 units sold during the domestic sales for the month of March.

During the first quarter of 2024, the industry produced a total of 7,394,417 units, spanning Passenger Vehicles, Commercial Vehicles, Three-wheelers, Two-wheelers, and Quadricycles.

Passenger Vehicles recorded 1,135,501 units, Commercial Vehicles reached 268,294 units, Three-wheelers stood at 164,844 units, and Two-wheelers maintained a strong performance with 4,503,523 units sold during Domestic sales for January to March 2024.

For the financial year from April 2023 to March 2024, the Indian automotive industry reported a total production of 284,347,742 units.

Passenger Vehicles accounted for 4,218,746 units, Commercial Vehicles saw 967,878 units, Three-wheelers recorded 691,749 units, and Two-wheelers dominated the market with 179,743,365 units sold, at the time of domestic sales for the same perod.

India’s dominance in the automotive arena is further highlighted by its status as the world’s largest manufacturer of two-wheelers, with over 21 million units produced annually, and as the largest manufacturer of tractors.

Moreover, it ranks as the world’s third-largest heavy truck manufacturer and fourth-largest car manufacturer. The sector has also been a magnet for foreign direct investment (FDI), with a cumulative equity FDI inflow of about USUSD 35.40 billion between April 2000 and September 2023.

Notably, the government’s initiatives have spurred growth, with the total automobile exports from India reaching 47,61,487 units in FY23, contributing significantly to the nation’s GDP and providing employment to about 19 million people directly and indirectly.

India’s drive towards electric vehicles (EVs) is gaining momentum. It is projected to become the third-largest EV market by 2025, with 2.5 million vehicles expected to be on the roads.

The sector presents a massive investment opportunity of over USD 200 billion over the next 8-10 years, with the EV market expected to grow at a CAGR of 49 per cent between 2022-2030.

In addition to EVs, the automotive industry is witnessing a shift in consumer preferences towards larger and more powerful vehicles across all segments. This trend is reflected in the increasing demand for Utility Vehicles (UVs) and Medium & Heavy Commercial Vehicles (M&HCVs).

The industry’s growth trajectory is further supported by initiatives such as Make in India, the Automotive Mission Plan 2026, and the National Electric Mobility Mission Plan 2020.

Furthermore, the revamped Vehicle Scrappage Policy and the introduction of Bharat NCAP, India’s own vehicle safety assessment program, underscore the government’s commitment to fostering innovation and sustainability in the automotive sector.

In terms of market size, the Indian passenger car market is expected to reach USD 54.84 billion by 2027, with a CAGR of over 9 per cent between 2022-27.

Meanwhile, the global EV market is projected to grow fivefold to USD 1,318 billion by 2028.

As the industry gears up for further growth, recent developments such as Ola Electric’s IPO, Mercedes-Benz’s record half-yearly sales, and the government’s incentives for clean technology vehicles exemplify the sector’s dynamism and potential.

With India poised to lead the EV revolution and solidify its position as a global automotive hub, the future of the Indian automobile industry looks promising and exciting.

The Indian automotive sector has become a beacon of opportunity for both domestic and international players, with companies investing heavily to capitalize on this lucrative market.

In tandem with the expansion of the auto market, the automotive aftermarket segment in India is also set to soar. Forecasts suggest that by 2026, the automotive aftermarket segment will reach USD 32 billion.

This segment encompasses a wide range of services and products, including vehicle parts, accessories, maintenance, and repair services. Ashish Sharma, CEO, Gavansa Enterprises, said, “India’s automotive industry stands at a pivotal juncture, poised to lead the global transition towards sustainable mobility and technological advancement. With a robust ecosystem in place, we’re witnessing an unprecedented convergence of innovation and growth. From electric vehicles to advanced features, the auto industry is at the forefront of pioneering solutions that address both environmental challenges and consumer demands.”

He added, “I believe that collaboration and innovation are the cornerstones of success in today’s automotive industry. By working together with industry stakeholders and embracing emerging trends, we can unlock new opportunities for growth and propel India’s automotive sector to even greater heights.”

The increasing demand for aftermarket products and services is being driven by factors such as the growing vehicle parc, rising consumer awareness, and a shift towards vehicle customization.

Furthermore, the auto components industry in India is gearing up for exponential growth in exports. Projections indicate that exports from this industry are set to grow fivefold in the next 10 years.

India’s auto components sector is already a significant contributor to the country’s exports, and this anticipated surge underscores the industry’s potential to become a global powerhouse.

Factors such as competitive pricing, quality standards, and technological advancements are expected to drive this robust growth in exports.