Report Description

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.