India’s automobile market is rapidly expanding, making it a significant force in the global automobile manufacturing industry. It is projected that the Indian automobile market will reach USD 300 billion by 2026. This growth is driven by various factors. From production figures to foreign investments and government initiatives, let’s explore the rise journey of the Indian automobile market.
In March 2024, India produced 2,325,959 vehicles, covering passenger vehicles, three-wheelers, two-wheelers, and quadricycles. This impressive figure demonstrates the immense potential of the industry. Particularly noteworthy is the dominance of two-wheelers, with 4,503,523 units sold domestically during the first quarter of 2024, showcasing their popularity among Indian consumers. For the financial year from April 2023 to March 2024, the Indian automobile industry reported a total output of 284,347,742 units, encompassing passenger vehicles, commercial vehicles, three-wheelers, and two-wheelers, indicating the industry’s rapid growth momentum. In 2023, India retained its position as the world’s third-largest automobile market in 2023, with sales exceeding 50 million units and the country’s passenger vehicle sales reached a record 4 million units. Japanese and Korean brands have been dominating the Indian automobile market. Maruti Suzuki, a subsidiary of Japan’s Suzuki Motor Corporation, commands a 41.7% market share.
India, the world’s largest market for motorcycles, produces over 21 million motorcycles annually and holds a significant position in the global tractor manufacturing as well. Furthermore, it ranks as the third-largest heavy truck manufacturer and the fourth-largest car manufacturer worldwide. Foreign direct investment (FDI) has played a crucial role in Indian automobile industry growth. From April 2000 to September 2023, India’s cumulative amount of FDI equity inflows amounted to approximately USD 35.4 billion, indicating significant untapped potential in India and providing a driving force for the industry.
India’s electric vehicle (EV) market is flourishing, with projections indicating it will become the third-largest EV market globally by 2025, with an estimated 2.5 million EVs on the roads. The industry is projected to offer a substantial investment opportunity of over USD 200 billion over the next 8-10 years, and it is forecasted to grow at a CAGR of 49% between 2022 and 2030. Apart from EVs, changing consumer preferences are also impacting the Indian automobile industry. The increasing demand for Utility Vehicles (UVs) and Medium and Heavy Commercial Vehicles (M&HCVs) reflects market diversification and maturation.
The rise of the Indian automobile market is also supported by government 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 vehicle safety rating program, demonstrate the government’s commitment to sustainable development in the automotive sector.
India is not only a massive market for domestic players but has also become an important hub for international players. More and more automakers are setting India as an export destination, leveraging the mature local supply chain and competitive costs to gain a foothold in the global automobile market. For example, companies like Honda and Suzuki have established manufacturing sites in India and effectively exported vehicles to other markets. The potential for India to become a global manufacturing hub is continually being explored and realized.
Against this backdrop of rapid growth, the Indian automobile industry will continue to attract more investment and attention. It is projected that India’s passenger vehicle market will reach USD 54.84 billion by 2027. Meanwhile, the global EV market is expected to grow fivefold to USD 1,318 billion by 2028. These figures indicate the increasing importance of the Indian automobile industry on the global stage.
