The future of automobiles industry in India
By: Linkcxo Global Pvt. Ltd.
Tags: Self Driving Cars, Mobility, Electric Car, Autonomous Cars, Automobile Industry

In the automobile industry, the prospects of India to emerge as the world’s third-largest passenger vehicle market by 2021 is nearing fruition. The annual production of vehicles is expected to reach its five million mark within the next four years. However, there are several factors to be considered to benchmark this milestone such as rapid economic development, supporting laws and regulations and continuous market demand. In order to set this objective in motion, it is critical to analyze the key trends which shape the Indian market, promote value-for-money consumer experience, and design effective strategies to win in the global market.

Key trends in the Indian automobile industry:

The Automotive Mission Plan 2016–26 aspires for the Indian automotive sector to contribute in excess of 12% to the country’s GDP while securing an additional 65 million jobs. Sustaining the economy through well-organized approaches such as rapid urbanization invites the migration of lifestyle from rural to city life. It is estimated that about 200 million people will move from rural areas to the country’s urban centers by 2030. Rising incomes will invite participation from a whole new workforce. As the workforce increases, so will the demand for more mobility. These macroeconomic and demographic trends could boost the growth of India’s automotive market. Currently, mini cars and hatchbacks continue to dominate the automobile industry of India. However, the majority of growth appears promising for compact SUVs, sedans and luxury vehicles.

With the focus to enhance mobility for every person, as well as promoting environmental protection, the Automotive Mission Plan 2016–26 aims to achieve a balance between improved manufacturing competitiveness and reduced emissions. Through AMP 2026, the government and the Indian automotive industry strives to triple industry revenues and expand net exports seven-fold. This would play a vital role in resolving unemployment through direct and indirect jobs, as well as establishing India’s stance in the automotive industry globally. The introduction of policies to address emissions has been proposed to ensure that manufacturers make the necessary adjustments concerning fuel efficiency and pollution. The government is also working on a vision to eliminate old internal combustion vehicles through policies featuring discounts, exchange offers, lower taxes, and simple compliance processes. In order to reduce dependency on oil imports, the government encourages the adoption of electric and hybrid electric vehicles through FAME2 (Faster Adoption and Manufacturing of Electric vehicles). FAME2 is expected to alleviate the usage of electric vehicles in both the public and private transport sectors. Goods and Services Tax has been lowered to 12 percent for battery-operated electric vehicles to encourage its early adoption. (there is a proposal to reduce it to 5%)

India has implemented Corporate Average Fuel Efficiency norms in which the manufacturers have to improve their fuel efficiency by 10 percent between 2017 and 2021 and by 30 percent or more from 2022.- McKinsey.com

AMP 2026’s ‘Make in India’ program has elevated India to be ranked in the 30th position in global manufacturing according to the World Economic Forum index. The future of India in the manufacturing arena is favorable due to companies investing in the Indian automotive sector for the availability of high-quality products at a low-cost. Its successful disposition with mini cars is enabling India to gain global repute in compact SUVs and sedans as well.

The global automotive industry is trending on four key challenges channeling towards new competition and cooperation which will reshape markets and revenues.

Electrification: India is comparatively new in the adoption of electric vehicles (EV) and therefore, EV market acceptance and EV industry dynamics. Though the government has set up supportive policies to promote its early adoption, many consumers remain wary of the cons over the pros. Though electrification is advantageous for reducing emissions and reliance on oil imports, the debates continue on its demerits concerning raw materials, cost, mileage, limited options and lack of proper infrastructure in power supply. If these shortcomings are taken into account through proper planning, the barriers to EV adoption can be easily removed.

Shared mobility: Shared mobility through e-cabs continues to gain popularity among the commuters due to its convenience and cost-saving benefits. Currently, private enterprises operate in the e-cabs sector. The role of shared mobility will evolve further through three key elements: Offering more competitive rates to customers, attentive supervision and upgrading the transport infrastructure.

Connected vehicles: Regarding connected vehicles, India is at a nascent stage to adopt this technology. Connectivity features such as navigation, infotainment, and communication interfaces are being included by automakers. The Internet has made it convenient to access vehicles through devices and connectivity-linked apps. The inclusion of car sensors and driving aids are also evolving to improve safety and security. Just as any innovation is tagged with its risks, car connectivity also has its share of challenges to ponder over. Cyber threats and data privacy are security concerns that require careful monitoring.

Autonomous vehicles: Autonomous vehicles promise to be a favorable answer to reduce traffic congestion and road accidents. However, driverless cars are not accepted widely due to the fear of weak infrastructure, lack of technological readiness and self-discipline.

A unique selling point of India:

India serves as a global hub to help companies find markets in other continents through its market experiences and challenges. Hyundai and Volkswagen use their factories in India to promote compact hatchbacks and sedans.

India is being recognized for high-quality managerial talent and valued by global companies for developing high-quality products at a lower cost.

Indian IT and auto-component businesses have a huge advantage in embedded systems in the coming years. There is a high potential for automobile manufacturers to embed software to their vehicles in order to manage the sensors, processors and storage devices.

We have witnessed massive transformations of Indian industries over the decades. The automotive industry is no exception in its progress which is starting to rival global standards. With the competition being fierce, Indian industries need to step up beyond the traditional ladder and adapt to the rush of the changing flow of the global market. To summarize it aptly, drastic changes within the industrial environment calls for drastic measures to counteract them.

For more high quality and original industry content, sign up with LinkCXO