India Automotive Market Size, Share & Trends Analysis Report By Passenger Vehicle (Sedan, Hatchback, SUV), By Light Commercial Vehicle, By Heavy Truck, By Three Wheeler, By Bus & Coach, And Segment Forecasts, 2020 - 2027

Report Overview

The India automotive market demand was pegged at 4,266,062 units in 2019. The market is expected to grow at a compound annual growth rate (CAGR) of 11.3% from 2020 to 2027. According to statistics published in April 2018 by the European Automobile Manufacturers Association (ACEA), India is ranked fourth in the top ten global car-producing countries. The country’s automotive sector is powered by the rising population, increasing disposable income, and ease of availability of credit and financing. Additionally, the market is expected to experience elevated demand for commercial vehicles from the flourishing logistics and passenger transport sector. Government initiatives and policies are prominent factors influencing market growth and are expected to upkeep the growth over the coming years.

In an attempt to promote market growth, the Ministry of Finance had announced a cut in the corporate tax rate in 2019. This revision in corporate taxes is anticipated to attract FDI in the country’s manufacturing sector, which is expected to help the automotive industry marginally. Furthermore, Government initiatives like Make in India and Automotive Mission Plan 2026 have boosted the Indian automotive sector. The Automotive Mission Plan 2026 is a collective vision of India's automotive industry and the government that aims to make the Indian automotive industry the driving factor of the Make in India initiative. In February 2019, the Indian government approved a fund requirement of USD 1.39 Billion for the financial years 2020-22 for the FAME-II scheme.

Apart from growing passenger vehicle demand, Light Commercial Vehicles (LCVs) are anticipated to record substantial growth in the next seven years. LCVs' growth prospects look favorable, owing to a positive outlook of the country's overall logistics industry. As retail e-commerce has witnessed a boom over the last few quarters, the hub-n-spoke business model's proliferation is anticipated to favor sales of LCVs. Vendors are increasingly focusing on untapped regional markets, including rural and semi-urban areas, in the country to improve sales. Better credit and financing options are expected to elevate growth opportunities in these markets over the forecast period.

The increasing adoption of technology in vehicles, industry supply chain and business models is projected to change the automotive market outlook over the forecasted period. The advent of automated, electrified, and connected vehicles are aiding the market growth by making driving easier, safer, and comfortable. Growing awareness of environmental hazards of emissions from ICE vehicles promotes the users to adopt alternative fuel vehicles. Government focuses on the shift to electric mobility by providing tax rebates and subsidies for the adoption of electric vehicles. Thus, the electric mobility trend coupled with the emergence of technologically advanced vehicles is expected to upkeep the market growth from 2020 to 2027.

The India automotive market has experienced considerable growth in recent years and achieved record sales in 2018. However, the market experienced a slump in the year 2019 due to its economic slowdown. Although the market was anticipated to revive in 2020, the spread of the novel coronavirus has further delayed the revival. Growing preferences for Sports Utility Vehicles (SUVs), rising demand for commercial vehicles in the logistic sector, and pent-up demand are certain factors expected to drive the market over the coming years. Additionally, the electrification of vehicles, especially, three-wheelers, and small passenger cars, is expected to be a major factor influencing market growth in the future.

India Automotive Market Trends

The automotive industry is a highly competitive market which is witnessing growth owning to factors such as increasing disposable income, the availability of the financing options, rising urban population, close substitutes for each segments which are equipped with best technological advancements such as active and passive safety systems, comfort features, and high performing powertrains. The market also enjoys growth due the dynamic Indian public transportation network and the growing logistic landscape.

The demand for electric vehicles is also another factor which is contributing to the growth of the Indian automotive market. According to Society of Indian Automobile Manufacturers, the automobile domestic sales trend indicates that the two-wheeler segment has the highest sales volume of 13,466,412 in the year 2021-22. This demand growth is attributed to the inclination towards two wheelers among the middle income group and the youth of the nation. 

Furthermore, the government is also pushing for the development of electric vehicle eco system by providing incentives such as FAME schemes. Manufacturers are also investing heavily and announcing partnerships to create EV infrastructure across the country. For instance, in February 2022, Apollo Tyres Ltd and Tata power has entered a strategic partnership to establish of 150 public charging station across India. This government initiative is creating growth avenues for the Indian automotive industry.

Passenger Vehicles Insights

The hatchback segment held the largest market share of 43.9% in 2019. The large market share is attributed to their smaller size that is suited to the Indian roads. Additionally, the country's prominent passenger car manufacturers have developed small hatchbacks that are well suited to the Indian market. With competitive pricing, premium features, small sizes, ease of financing options, manufacturers have carved a niche for targeting the country’s middle-class population.

The MPV/MUV/Van segment is projected to expand at a healthy CAGR over the next seven years. MUVs/MPVs are prominently used in India for passenger transportation as well as by large families. The segment is dominated by a few major players that account for more than half of the overall market. The standout feature for MPVs/MUVs is the ability to accommodate more than five people in a vehicle, making it a preferred choice for passenger transport. Additionally, the availability of CNG fuel for these vehicles reduces the operating costs and significantly improves profit margins for passenger transport companies. Thus, the passenger transport industry is expected to upkeep the demand for MPVs/MUVs in near future.

Light Commercial Vehicles Insights

Light Commercial Vehicles (LCVs), ranging between 2 to 3.5 tons accounted for 49.8% of the overall LCV demand in 2019. The immense popularity of pickup trucks such as Mahindra Bolero Pickup, Ashok Leyland Dost, and Tata Super Ace contributes to the large share of the segment. Pickup trucks act as a perfect blend of compact size and high load carrying capacity, making them a preferred choice of freight transport. Additionally, recreational pickups like Isuzu D-Max and Tata Xenon are expected to drive the 2 to 3.5 tons trucks segment demand from non-commercial applications.

The less than 2 tons truck segment is anticipated to expand at the fastest CAGR of over 7% from 2020 to 2027. The primary factor influencing the growth rate is the use of light vehicles for last-mile deliveries. Owing to the small size of roads in the country, compact and small-sized trucks and pickups are preferred for last-mile connectivity. Thus, the logistics sector is expected to promote a healthy CAGR for these trucks over the coming years.

Heavy Trucks Insights

More than 25 tons segment held the largest volume share of 56.3% in 2019. Growing demand for goods and increased construction and infrastructure development are the major factors driving the heavy trucks market demand. The trucks manufactured are fuel-efficient, reliable, and effective and possess high load carrying capacities as compared to other trucks that were early manufactured. The increasing number of vendors for trucks' components is providing growth opportunities for the truck manufacturing market.

The 7.5 to 12 tons trucks segment is anticipated to expand at the fastest CAGR over the forecast period. Applications such as intrastate goods transportation do not require a large load-carrying capacity. However, pickup trucks and LCVs do not serve the purpose of goods transportation prompting users to adopt medium-duty trucks with tonnage capacity between 7.5 to 12 tons. Additionally, these trucks' lower purchase price is also expected to be a key driving factor for the segmental growth in the forthcoming years.

Three Wheeler Insights

Three wheelers accounted for almost 15% of the total automotive market in 2019. Three-wheelers are a common mode of transport used by people for short-distance travel. The fact that Indian customers are extremely price-sensitive helps the three-wheeler market as it provides short-distance passenger transport at a low price. The demand is expected to remain steady over the years due to the growing population in that country that upkeeps transportation demand.

The three wheeler market is expected to experience a shift from conventional vehicles to electric vehicles sooner than their LCV counterparts owing to their small size and limited load-carrying capacity. The advent of e-rickshaws has already created a demand for the vehicle across the country, predominantly from the tier 2 and tier 3 cities. The market for three-wheelers is highly consolidated, with Bajaj Auto Ltd. contributing to almost half of the total 2019 sales in the country. Italian automaker Piaggio & C. SpA contributed close to 25% market share in 2019; thus, encapsulating almost three quarters of the market. In an attempt to retain market share, Bajaj Auto Ltd. has announced the launch of its Bajaj RE electric auto rickshaw in April 2021, whereas Piaggio & C. SpA launched its electric rickshaw in December 2019.

Buses and Coaches Insights

Buses with tonnage capacity ranging between 3.5 to 7.5 tons accounted for over 50% of the total market demand in 2019. The segment primarily includes intra-city buses along with special-purpose buses that are used for school, local tours, ambulance, hospitality, and other services. The increasing population is contributing to the increasing demand for buses in school and hospitality service applications. Further, light-duty buses for transportation of employees of companies in the metro cities are expected to upkeep the segment dominance over the forecast period. 

Inter-urban and inter-city buses with a tonnage capacity of more than 12 tons are projected to expand at a substantial CAGR in the next seven years. This growth is attributable to increasing connectivity among different states that promote long-distance travel. Additionally, the growing trend of working in metropolitan cities located in different states makes frequent log travels a necessity. The bus/coach manufacturers have equipped vehicles with features and services that offer utmost comfort, making coaches a preferred choice for long travels among customers.

Key Companies & Market Share Insights

The market is characterized by the presence of dominant players capturing a large market share of individual segments. Maruti Suzuki India Limited and Hyundai Motor India account for more than half of the country's passenger vehicles market. Maruti Suzuki India Limited has been the market leader for a long time and continues to dominate the market by offering multiple vehicles in each passenger vehicle sub-segment at competitive prices. Other prominent players in the passenger vehicle segment include Mahindra & Mahindra Ltd., Tata Motors, Honda India, and Ford Motor Company.

The three wheelers market is dominated by two companies, Bajaj Auto Ltd. and Piaggio & C. SpA, accounting for almost three-quarters of the market demand in 2019. However, with the advent of electric rickshaws, companies such as Mahindra Electric Mobility are expected to intensify the country's market competition. Apart from the three-wheelers market, the electrification trend is expected to change the competitive scenario of the country's overall automotive industry. Companies have launched or announced the launch of electric cars, busses, and trucks to sustain the growing competition. Some prominent players in the India automotive market include:

• Ashok Leyland

• Bajaj Auto Ltd.

• Daimler AG

• Eicher Motors Limited

• Honda Motor Co., Ltd.

• Hyundai Motor India

• Mahindra and Mahindra Ltd.

• Maruti Suzuki India Limited

India Automotive Market Report Scope

Segments Covered in the Report

This report forecasts volume growth at the country level and provides an analysis of the latest industry trends from 2016 to 2027 in each of the sub-segments. For this study, Grand View Research has segmented the India automotive market report based on a passenger vehicle, light commercial vehicle, heavy truck, bus and coach, and three-wheelers:

• Passenger Vehicle Outlook (Volume, Units, 2016 - 2027)

  • Sedan

  • Hatchback

    • Mini Hatchback

    • Small Hatchback

  • SUVs

  • MUVs/MPVs/Vans

• Light Commercial Vehicle Outlook (Volume, Units, 2016 - 2027)

  • Less than 2 Tons

  • 2 to 3.5 Tons

  • 3.5 to 7.5 Tons

• Heavy Truck Outlook (Volume, Units, 2016 - 2027)

  • 7.5 to 12 Tons

  • 12 to 25 Tons

  • More than 25 Tons

• Bus and Coach Outlook (Volume, Units, 2016 - 2027)

  • 3.5 to 7.5 Tons

  • 7.5 to 12 Tons

  • More than 12 Tons

• Three Wheelers Outlook (Volume, Units, 2016 - 2027)