India Automotive Market Size, Share & Trends Analysis Report By Passenger Vehicle (Sedan, Hatchback, SUV), By Light Commercial Vehicle, By Heavy Truck, By Bus & Coach, And Segment Forecasts, 2023 - 2030

Report Overview

The India automotive market demand was pegged at 3,641,233 units in 2022 and is expected to grow at a compound annual growth rate (CAGR) of 9.7% from 2023 to 2030. 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 sectors. Government initiatives and policies influence market growth and are expected to maintain growth over the coming years.

The Ministry of Finance announced a cut in the corporate tax rate in 2019 to promote market growth. 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.

Besides growing passenger vehicle demand, Light Commercial Vehicles (LCVs) are anticipated to grow substantially in the next seven years. LCVs' growth prospects look favorable, owing to a positive outlook on 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 the country's untapped regional markets, including rural and semi-urban areas, to improve sales. Better credit and financing options are expected to elevate growth opportunities in these markets over the forecast period.

The increasing technology adoption in vehicles, industry supply chains, and business models will change the automotive market outlook over the forecasted period. The advent of automated, electrified, and connected vehicles is aiding market growth by making driving easier, safer, and more comfortable. Growing awareness of the environmental hazards of emissions from ICE vehicles encourages users to adopt alternative fuel vehicles. The government focuses on the shift to electric mobility by providing tax rebates and subsidies for adopting electric vehicles. Thus, the electric mobility trend, coupled with the emergence of technologically advanced vehicles, is expected to upkeep the market growth from 2023 to 2030.

Growing preferences for Sports Utility Vehicles (SUVs), rising demand for commercial vehicles in the logistic sector, and pent-up demand are 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.

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

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

Furthermore, the government is also pushing for the electric vehicle ecosystem development by providing incentives such as FAME schemes. Manufacturers are also investing heavily and announcing partnerships to create EV infrastructure nationwide. For instance, in February 2022, Apollo Tyres Ltd and Tata Power entered a strategic partnership to establish 150 public charging stations 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 40.2% in 2022. The large market share is attributed to its smaller size, suited to Indian roads. The country's prominent passenger car manufacturers have also developed small hatchbacks suited to the Indian market. With competitive pricing, premium features, small sizes, and 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 significant CAGR of 10.3% during the forecast period. MUVs/MPVs are prominently used in India for passenger transportation and by large families. The segment is dominated by a few major players, accounting 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 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 soon.

The SUVs segment is estimated to register the fastest CAGR of 13.0% over the forecast period. Changing consumer preferences and evolving lifestyles have driven the demand for SUVs in India. SUVs are perceived as versatile vehicles that offer a combination of comfort, space, and ruggedness, making them suitable for both urban and off-road driving experiences. As consumers increasingly prioritize a sense of adventure, safety, and a commanding driving position, the SUV segment has gained traction and become a preferred choice for many Indian car buyers.

Light Commercial Vehicles Insights

The Light Commercial Vehicles (LCVs), ranging between 2 to 3.5 tons segment, accounted for the largest volume of 47.7% in 2022. 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 segment is estimated to register the fastest CAGR of 12.9% over the forecast period. The primary factor influencing the growth rate is the use of light vehicles for last-mile deliveries. Due to the country's small roads, 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

The more than 25 tons segment held the largest volume share of 53.4% in 2022. Growing demand for goods and increased construction and infrastructure development drive the heavy trucks market demand. The trucks manufactured are fuel-efficient, reliable, and effective and possess high load-carrying capacities compared to other trucks that were earlier manufactured. The increasing number of truck components vendors provides growth opportunities for the truck manufacturing market.

The 7.5 to 12 segment is expected to grow at the fastest CAGR of 16.7% over the forecast period. Applications such as intrastate goods transportation do not require a large load-carrying capacity. However, pickup trucks and LCVs serve a different purpose than goods transportation, prompting users to adopt medium-duty trucks with tonnage capacity between 7.5 to 12 tons. These trucks' lower purchase price is also expected to be a key driving factor for segmental growth in the forthcoming years.

Buses And Coaches Insights

The buses with tonnage capacity ranging between 3.5 to 7.5 tons segment held the largest volume share of 51.1% in 2022. The segment primarily includes intra-city buses and special-purpose buses used for school, local tours, ambulance, hospitality, and other services. The increasing population contributes 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.

The more than 12 tons segment is expected to grow at the fastest CAGR of 13.4% over the forecast period. This growth is attributable to increasing connectivity among states promoting long-distance travel. Additionally, the growing trend of working in metropolitan cities in different states makes frequent log travel necessary. The bus/coach manufacturers have equipped vehicles with features and services that offer the utmost comfort, making coaches a preferred choice for long travels among customers.

Key Companies & Market Share Insights

The India automotive market players are undertaking strategies such as product launches, acquisitions, and collaborations to increase their global reach. For instance, in July 2023, Maruti Suzuki, an automaker company, introduced the Invicto, a multi-purpose vehicle. This launch signifies the company's expansion into the premium three-row segment, offering customers a blend of upscale design, smart packaging, and an array of safety features and innovations. The Invicto caters to those seeking a premium three-row vehicle that embodies the qualities of both an SUV and an MPV.

Recent Developments

• In April 2023, MG Motor India, an automaker, introduced the Comet EV, the country's most economical electric vehicle. With a starting price of Rs 7.98 lakh, it provides a range of 230 kilometers on a single charge and can fully charge its batteries from 0 to 100 in seven hours using a 3.3 kW AC charger.

• In June 2023, Mercedes-Benz India, a luxury vehicles company, introduced the 7th-generation Mercedes-AMG SL 55 Roadster in India, priced at Rs 2.35 crore (ex-showroom). This open-top sports car has a 4.0-liter bi-turbo V8 engine generating 476bhp. It competes with the Porsche 911 Carrera S Cabriolet, the sole other open-top sports car in this price range, priced at Rs 2.18 crore.

• In June 2023, MG Motor India partnered with Jio platforms to provide a wide range of connected car features in their vehicles. This collaboration will bring Hinglish voice assistant-enabled features, powered by Jio's digital assets, to MG's latest electric vehicle, the Comet EV. The system includes integrated music and payment apps, connectivity platforms, and hardware. This MGI-Jio partnership aims to enhance the driving experience for GenZ customers by combining safety, in-car experiences, and advanced technology.

• In February 2023, Lumax Auto Technologies Ltd. (LATL), an automotive components manufacturer, entered into a strategic agreement with the International Automotive Components Group (IAC), a supplier of automotive components and systems. The partnership involves LATL acquiring a majority stake in IAC International Automotive India. This collaboration enables LATL to expand its customer base beyond the two- and three-wheeler segments and enter the passenger and commercial vehicle segments. IAC India is a key supplier to companies like Mahindra & Mahindra, Maruti Suzuki India, and Volkswagen India.

• In January 2023, a luxury vehicles company, BMW India, introduced the BMW i7 and the 7 Series in India. With a price of Rs 1.95 crore (ex-showroom), the BMW i7 became the flagship electric vehicle for the company in India. This luxury electric sedan, the first of its kind from BMW, showcases an exceptional driving experience while emphasizing a strong dedication to sustainability.

India Automotive Market Report Scope

India Automotive Market Report Segmentation

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2017 to 2030. For this study, Grand View Research has segmented the India automotive market based on passenger vehicles, light commercial vehicles, heavy trucks, buses and coaches:

• Passenger Vehicles Outlook (Volume, Units, 2017 - 2030)

  • Sedan

  • Hatchback

    • Mini Hatchback

    • Small Hatchback

  • SUVs

  • MUVs/MPVs

• Light Commercial Vehicles Outlook (Volume, Units, 2017 - 2030)

  • Less than 2 Tons

  • 2 to 3.5 Tons

  • 3.5 to 7.5 Tons

• Heavy Trucks Outlook (Volume, Units, 2017 - 2030)

  • 7.5 to 12 Tons

  • 12 to 25 Tons

  • More than 25 Tons

• Buses & Coaches Outlook (Volume, Units, 2017 - 2030)

  • 3.5 to 7.5 Tons

  • 7.5 to 12 Tons

  • More than 12 Tons