India Passenger Car Market is
growing at a robust CAGR due to rapid technological advancements in the recent
years higher disposable incomes of consumers and increase in demand for Sport
Utility Vehicles (SUVs). Furthermore, with emerging trends and growing business
prospects in the automotive industries the central and state governments have
been introducing favorable policies which are financially helping the car
manufactures across the country.
India Passenger Car Market Scope
Passenger cars are vehicles
which are designed and constructed for the carriage of passengers. These
vehicles have become an integral part of society, which has transformed
individual mobility since their inception. The rapid urbanization has evolved
these vehicles over time. They have become the dominant mode of road transport
in much of the world.
These vehicles are classified
in four segments: Hatchback, Sedan, Sport Utility Vehicle (SUV)/Multi-Utility
Vehicle (MUV). A hatchback is a 4-door vehicle which is assembled on a two-box
body with the rear door that swings upward to provide access to the main
interior. Sedans are a 3-box configuration vehicle which are longer than
hatchbacks with extended boot space. Sport Utility Vehicles are built with
powerful engines as compared to other types of passenger cars and are meant for
driving on rough terrains. Multi-utility vehicles (MUV) are made to carry a
greater number of passengers for transportation. They have higher seating
capacity in comparison to other types of passenger cars. MUVs may look like
SUVs but they have less powerful engines than SUVs.
India Passenger Car Market Overview
In recent years, the India
Passenger Car Market has started to grow rapidly and there are numerous factors
which are leading this growth. One of them is the rapid technological
development in automobiles which has enhanced the driving experience in a more
convenient manner along with other features that these passenger cars now come
with. Moreover, people’s preference for owning a personal vehicle has increased
significantly over the last couple of years. The COVID-19 pandemic has
generated a notion of distance among the people and has pushed their mindset to
stay away from crowded public transportation. Apart from this, the good road
infrastructure has also led to this rapid growth in the industry because people
prefer having a personal vehicle that provides convenience, and safety.
The India Passenger Car
Market is also facing other transformation such as development in electric car,
regulations in cars powered with internal combustion engines, etc. India is at
the forefront when it comes to climate concerns. The Indian Government has
taken various measures which are in line towards sustainable development and
environmental friendliness. One example is the emission regulation from BS4 to
BS6 which regulates the pollution emitted from automobiles. In the electric
passenger car market, the government has provided subsidies to increase the
adoption of electric cars in the country.
India Passenger Car Market Drivers
The India Passenger Car
market in India has grown rapidly in recent years, driven by a combination of
factors, such as technological advancement, increased preference for owning a
personal car, higher disposable income, easy financing options and a supportive
regulatory environment.
The Indian passenger car
market is highly competitive which becomes quite favorable to consumers in
terms of pricing. This has led to numerous advanced featured cars in the reach
of the larger population of the country. This is further augmented with the
higher disposable income. Moreover, the rapid digitalization is also driving sales
of the passenger car in India by reducing the tedious process of paperwork and
travelling to dealerships and thus increasing margins for OEMs. In addition,
better financing options are also now available to the consumers thus,
immensely leading to the growth of India passenger car market.
Supportive government
policies are also helping the growth of the market. Initiatives such as
Production Linked Incentive (PLI) scheme outlays USD3.5 billion to boost
domestic manufacturing and attract investments in the automotive manufacturing
value chain. The National Electric Mobility Mission Plan was taken up by the
government for the consistent, affordable and competent hybrid and electric
vehicles.
India Passenger Car Market Trends
Increasing demand for SUVs among
consumers is due to more space, high ground clearance, more seating capacity
and are good on rugged roads. Among four vehicle types in passenger car;
hatchback, sedan, and SUV/MPV; SUVs have seen the maximum growth in the past
year and captured most of the market. Whereas hatchbacks have seen the decline
in their market share by volume which were once used to dominate the Indian
passenger car market.
Technological advancements
such as automatic braking, self-parking capabilities etc., are also trending in
the automobile sector. Recent car launches are now equipped with the advanced
driver assistance system (ADAS) feature which includes features such as lane
departure warning, automatic emergency braking and adaptive cruise control.
These features enhance safety and driving convenience. This trend is increasing
now due to safety concerns among the people and government’s push for reducing
road fatalities.
Moreover, one of the most
disrupting trends is of electrification among passenger cars in India. The
availability of government subsidies and incentives has encouraged the
development and production for electric cars in India. The sales of electric
cars in India have more than doubled in the last financial year (FY 2023) and
it is expected to grow rapidly in the forecast years. Almost every vehicle
segment now has at least one EV offering.
India Passenger Car Market Challenges
India is one of the leading
markets of shared mobility. Over the past three-four years, India has seen the
rapid rise of ride-share apps like OLA, Uber etc. Although, development in this
area has led to more convenient travelling without the hassle of driving in the
heavy traffic, it has avoided the maintenance cost of owning a personal
vehicle, thus affecting the sales of personal vehicles and challenging the
concept of ownership.
Geopolitical instability and
record inflation are driving up prices of commodities which is directly
resulting in higher car prices. Further, the transition to EVs has disrupted
the market and divided it into more segments coupled with looming electric
infrastructure of the country has made the situation more complicated. This has
resulted in the demand and supply gap of automotive components such as lag in
battery supply and charging stations installation.
Market Recent Developments
- In 2023, Tata
Passenger Electric Mobility Ltd (TPEML), a part of Tata Motors has bought Ford
India Pvt Ltd.’s Sanand facility based in Gujrat for USD88.5 million
approximately.
- In 2023, Hyundai Motors India has signed the
acquisition deal with General Motors for their Talegaon facility located in
Pune (Maharashtra).
- In 2022, Toyota Kirloskar Motor and Maruti Suzuki
India Ltd has collaborated on the fields of development and production in India
to subdue the challenges of electrification and carbon neutrality.
Market Opportunities
The passenger car market in
India presents several opportunities for growth and innovation to its
stakeholders. The government’s Production Linked Incentive Scheme has boosted
domestic manufacturing and investments in the country. It has also led to the
formation of several startups linked to the passenger car market, especially in
the areas related to electric cars and their components. India is a leading
shared mobility market in the world and this market has shown significant
adoption for electric passenger cars. Moreover, increasing preference for SUVs
in recent years has led to the launch of several new vehicles in this vehicle
segment only.
The country’s poor charging
infrastructure for electric cars has led to the opportunities for other areas
like hybrid vehicles, fuel blending, etc. Several government schemes have
supported the transforming passenger car market in India, for instance; under
the FAME I & II, a total of 532 EV charging stations are installed by the
oil companies under the Ministry of Petroleum and Natural Gas, in the Union
Budget 2022-23 the government has introduced battery swapping policy which will
allow drained batteries to be swapped at designated charging stations. Thus,
the new market trends and supporting government schemes have provided
tremendous opportunities for investors and consumers both, and the market is
likely to follow the same trend in the forecast period.
Market Segmentation
The India Passenger Car
Market is segmented based on vehicle type, by propulsion type, by transmission
type, by price segment, by region, and competitive landscape. In vehicle type,
the market is segmented into Hatchback, Sedan, and SUV/MUV. In propulsion type,
it is segmented into petrol, diesel, electric, and others (which include
hybrid, CNG etc.). Based on transmission type, the market is further classified
into automatic and manual. Based on the price segment, the market is segmented
into economy, mid-range, premium, and luxury. By region, the market is divided into
North, South, East and West regions.
Company Profiles
Maruti Suzuki India Limited,
Hyundai Motor India Limited, Tata Motors Passenger Vehicle Limited, Mahindra
& Mahindra Limited, Kia India Private Limited, Toyota Kirloskar Motor
Private Limited, Honda Cars India Limited, MG Motor India Private Limited,
Renault India Private Limited, and Skoda Auto Volkswagen India Private Limited are
some of the major players in the India passenger car market.