The Indian automobile industry is a significant player on the global stage, characterized by substantial market size, growth potential, and a growing emphasis on electric and autonomous vehicles. As of 2023, India is recognized as the third-largest automobile market in terms of sales, overtaking Japan. In terms of production output, India retains its position as the fourth-largest light vehicle producer globally. As of 2023, here’s an overview of the Indian automobile industry based on the provided information:
Market Size and Growth:
The Indian automotive market has shown substantial growth over the years. In 2019, the market demand was approximately 4.27 million units. The market is projected to grow at a Compound Annual Growth Rate (CAGR) of 11.3% from 2020 to 2027, driven by factors like rising population, increasing disposable income, and government initiatives.
The Passenger Vehicle segment achieved an all-time high in domestic sales, surpassing the previous peak recorded in FY 2018-19. Similarly, the Commercial Vehicles segment also experienced robust domestic sales, reaching its second-highest levels and coming close to the previous peak of FY 2018-19. Although the start of FY 2022-23 was marked by disruptions in the supply chain due to the Russia-Ukraine conflict, these disruptions were effectively managed through efficient supply chain practices. Additionally, the moderation of commodity prices has contributed to stabilization.
Looking ahead, the industry anticipates favorable policy initiatives, substantial investments in infrastructure as outlined in the Budget, newly introduced PLI schemes aimed at boosting private sector investments, forward-looking logistics and foreign trade policies, and the recently announced gas pricing guidelines. These combined efforts are expected to provide further impetus for growth in the forthcoming years.
Government Initiatives and Policies:
➧ The Indian government has implemented several initiatives to promote the growth of the automotive sector. Initiatives like Make in India and Automotive Mission Plan 2026 have played a significant role in boosting the industry.
➧ In September 2021, a Production-Linked Incentive (PLI) scheme worth Rs. 25,938 crore (approximately US$ 3.49 billion) was introduced for the automobile and auto components sector.
➧ The government’s commitment to electric mobility is evident through policies aiming to achieve 30% electric vehicle sales by 2030.
Electric Vehicle (EV) Growth:
➧ The EV market in India is expected to grow at a CAGR of 49% between 2022 and 2030, with annual EV sales projected to reach 10 million units by 2030.
➧ This growth in the EV sector is anticipated to create around 50 million direct and indirect jobs by 2030.
➧ The government’s focus on electric vehicles is driven by the need to reduce emissions and promote sustainable mobility solutions.
The Indian automobile industry has experienced a mixed performance in 2023, influenced by various factors including seasonality, market trends, and new model launches. Wholesale volumes in July 2023 were anticipated to be weak across all segments due to seasonality, with the expectation of subdued performance continuing into August 2023. The building up of inventory was projected to commence in September 2023, in preparation for the festive season scheduled for October-November 2023. Despite this backdrop, certain segments have demonstrated resilience and better-than-expected performance.
Segment Performance in July 2023:
The Indian automobile industry has experienced a mixed performance in 2023, influenced by various factors including seasonality, market trends, and new model launches. Wholesale volumes in July 2023 were anticipated to be weak across all segments due to seasonality, with the expectation of subdued performance continuing into August 2023. The building up of inventory was projected to commence in September 2023, in preparation for the festive season scheduled for October-November 2023. Despite this backdrop, certain segments have demonstrated resilience and better-than-expected performance.
Here’s a segmental performance breakdown for different vehicle categories in July 2023:
1. Medium and Heavy Commercial Vehicles (M&HCVs): Delivered better-than-expected volumes despite the impact of seasonality and heavy pre-buying in Feb-A.
2. Tractors and Three-Wheelers: Continued to deliver better-than-expected volumes in July-23.
3. Passenger Vehicles (PVs):
- Maruti Suzuki India Ltd.: Overall volumes were up 3% YoY, with domestic PV volumes up 6% YoY and exports up 9% YoY.
- Mahindra and Mahindra Ltd.: Reported 29% YoY growth in PV volumes.
- Tata Motors Ltd.: Domestic PV volumes were flat YoY, with electric vehicles showing growth.
4. Two-Wheelers:
- Hero Motocorp Ltd.: Reported a volume decline of 12% YoY and 10% month-on-month. Motorcycle sales volumes decreased 14% YoY/month-on-month, while scooter sales increased 26% YoY.
- Bajaj Auto Ltd.: Sales were down 10% YoY/month-on-month. Motorcycle sales decreased 15% YoY, with domestic sales down 14% YoY and exports down 16% YoY.
- TVS Motor Company Ltd.: Reported volume growth of 4% YoY. Domestic two-wheelers grew 16% YoY, while two-wheeler exports remained subdued, down 21% YoY.
- Eicher Motors Ltd.’s Royal Enfield: Reported 32% YoY growth in volumes, with domestic wholesales up 42% YoY and exports down 22% YoY.
5. Electric Vehicles:
- Tata Motors Ltd.: Electric vehicle production ramping up, with electric vehicle volumes at ~6,300 units.
In conclusion, the Indian automobile market demonstrates a vibrant and dynamic landscape, marked by a diverse range of performances across various segments. Despite anticipated weak wholesale volumes in certain segments due to seasonality, other segments like Medium and Heavy Commercial Vehicles, tractors, and three-wheelers have managed to exceed expectations. Passenger vehicles have maintained steady growth over the past four quarters, with key players like Maruti Suzuki, Mahindra and Mahindra, and Tata Motors showcasing resilience and adaptability.
The two-wheeler segment has shown a mixed picture, with Hero Motocorp experiencing a decline in sales, while companies like TVS Motor and Eicher Motors’ Royal Enfield display growth and innovation. Notably, the emerging electric vehicle market is gaining traction, evident from Tata Motors’ efforts in ramping up electric vehicle production.
This vibrant market dynamic is further fueled by factors such as capacity expansions, introduction of new models, and evolving consumer preferences. While challenges and fluctuations are inevitable, the Indian automobile market’s ability to sustain growth, adapt to changing conditions, and innovate in response to market demands highlights its vibrancy and potential for continued expansion in the future.
Disclaimer:
This blog/video is for educational purposes only and should not be considered financial advice. It is essential to conduct your own research and consult with a qualified financial advisor before making any investment decisions. Your personal financial situation, risk tolerance, and investment goals are unique, and this content may not be suitable for you. Please make informed decisions based on your specific circumstances and professional guidance.
