The future of mobility in the Indian Automotive Market

 

India took around 7 years to increase the annual production of vehicles from 3 million to 4 million, while the next million increase is expected to come in less than 5 years. This is the kind of growth and demand the country has been witnessing in the automotive sector. With GDP growth consistently over 7 percent for the past few years, India is looking at healthy growth in the automobile market. These trends favorable for the multinational companies are being used by the Market research companies in India to elaborate on the benefits of entering the Indian market. The leading Business consulting companies, Tecnova brings you some of the key trends shaping the Indian passenger-vehicle market- 

• Favorable macroeconomic and demographic trends 

The Rising middle class, increasing urbanization and higher disposable income with consumers are leading to growth in many industries, the automobile being one of the major beneficiaries. Currently, the automobile sector contributes approximately 7 percent to India’s GDP. In the past decade, disposable income with consumers has increased. Also, easy access to financing activities on one hand, and a plethora of choices for different customer segments has resulted in sales of passenger vehicles among the aspiring middle class. 

• Continued government focus on supporting the industry 

The government has been supportive of growth in the automotive industry with a strong focus to reduce oil dependence and carbon emission. In the Automotive Mission Plan 2026, the government and industry have set a target to triple industry revenues to USD 300 Billion, and expand exports to seven-fold, to USD 80 billion. The government is also advocating the sales of electric vehicles by launching programs like National Electric Mobility Mission Plan (NEMMP) and providing additional subsidies and tax rebates on sales of electric vehicles along with Small business consulting firms that work on bridging the gap between the country’s market and services of multinationals.

• India developing as a manufacturing hub 

Not only for the domestic companies but for foreign companies as well, India has emerged as a manufacturing hub. Automotive companies are manufacturing in India not only for sale in the country but for export to other countries across the globe as well. The government’s ‘Make in India’ initiative is playing an important in improving country’s manufacturing capabilities and know-how. Apart from domestic companies such as Maruti and Mahindra, foreign companies such as Toyota and Hyundai have also set up a manufacturing hub in India to export passenger vehicles to other countries. 

Now, given the trends in the Indian automotive section, what value proposition does India provide to any company to set up business in India? 

• An Archetype for Emerging Markets 

India, owing to its vastness and diversity, in an archetype in many ways for other emerging markets in Latin America, South East Asia, and Africa. The Rising middle class, increasing urbanization and similar consumer preferences – quality product at a reasonable price – make India similar to other emerging markets. The products developed for the Indian market entry strategy could be exported and sold to other emerging markets with nil to very little customization. That provides ample scope for companies to expand their geographic footprint without much investment and increase their business in India. 

• Embedded Software 

India’s scale of IT industry, skilled IT talent and the increasing use of technology in vehicles are perfectly in sync to gain the maximum benefit of the growing market of connected cars and the internet of things. In the near future, owing to the growth in connected cars and autonomous vehicles, the cars are expected to be loaded up with sensors, software and hardware devices. This positions India at a very sweet spot to leverage its huge IT talent pool. 

• High-quality Managerial Talent at a Low-cost 

Multinationals use India as a hub for low-cost talent. However, India has been recognized as a high-quality managerial talent hub by global organizations lately. The Indians have started occupying major positions in various industries from Consumer goods, Automotive to Pharmaceutical and Banking, amongst others. Major organizations leverage local talent with the motive of driving innovation through R&D centers. In case of leading global combinations, more than a quarter of the innovations are done by the Indian teams.  

The Indian Automotive industry is on the verge of a major change. The disruptions that are brought up by the Market research companies in India are generating major opportunities for the professionals, ultimately changing the competitive game for players who are willing to step beyond their traditional roles and engage with their customers digitally. Small business consulting firms in India are also taking up their calls to assist major organizations to evaluate the Indian audience and make multiple benefits from the increasing demand and growth in sales. 

Tecnova, the Indian Business Development Consultant, helps global giants set up and/or establish their business in the country while establishing a suitable market for the specific organization.