India is predicted to emerge because of the world’s third-largest passenger-vehicle market by 2021. It took India around seven years to extend its annual production to four million vehicles from three million. However, a subsequent milestone—five million—is expected in but five years. Hitting that mark will depend upon today’s rapid economic development continues. With a projected annual GDP rate of growth of seven percent through 2020,3 ongoing urbanization. A burgeoning consuming class, and supportive regulations and policies.
With this growth in mind, we began to create a perspective on the trends shaping the Indian market, the worth proposition for the car industry in India, and imperatives for winning within the market. this text explores all three.
Key trends shaping the Indian passenger-vehicle market
The marketplace for passenger vehicles within the country will evolve within the context of several larger trends, some specific to India, and a few relevant globally.
Favorable macroeconomic and demographic trends
Currently, the automotive sector contributes quite 7 percent to India’s GDP.4 The Automotive Mission Plan 2016–26 sets an aspiration to extend the contribution to 12 percent.
A number of economic trends could help in meeting this target. Rapid urbanization means the country will have over 500 million people living in cities by 2030—1.5 times the present US population. Rising incomes also will play a task, as roughly 60 million households could enter the consuming class (defined as households with incomes greater than $8,000 per annum) by 2025. At an equivalent time, more people will join the workforce. Participation could reach 67 percent in 2020, as more women and youth enter the work market, raising the demand for mobility.
Some of them would leap straight into the four-wheeler segment, et al. It will graduate from two- to four-wheelers. Over 44 percent of the consuming-class households are going to be in 49 growth clusters. For example, Delhi is predicted to possess an equivalent GDP per capita at purchasing power parity. Because the entire country of Russia is 2025.6 Cities like Delhi is a sweet spot for car manufacturers to focus on.
In the future, these macroeconomic and demographic trends could shift pockets of growth. In the passenger-vehicle market. Mini cars and hatchback cars are the mainstays of the car industry in India. With a share of around 50 percent and growth of 6 to 7 percent between the fiscal year 2014 and 2017. These segments will still maintain a dominant position, but the bulk of the growth is predicted. To return from new segments like compact SUVs, sedans, and luxury vehicles.
Continued government specialize in supporting the industry
Through the Automotive Mission Plan, the National Electric Mobility Mission Plan (NEMMP). In other initiatives, the govt seeks to realize two objectives. Facilitate long-term growth within the industry and reduce emissions and oil dependence.
To tackle emissions, the govt seeks to bring local standards as well up to par with global standards, enabling India to leapfrog from BS-4 to BS-6 emissions (the Euro 6 equivalent) by 2020 (Exhibit 1). Additionally, India has implemented Corporate Average Fuel Efficiency norms. During which the manufacturers need to improve their fuel efficiency by 10 percent between 2017 and 2021 and by 30 percent or more from 2022.
Additionally, to deal with pollution from old vehicles. The govt is functioning on an initiative that focuses on the formulation of end-of-life or scrappage policies. It plans to offer incentives as well as for the adoption of those policies. With the assistance of lower taxes. Discounts on purchase prices as well as straightforward compliance processes.
To reduce dependency on oil imports, the govt is promoting the adoption of other fuels through FAME2, which is an extension of the first FAME (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles) initiative.
The development of India as a producing hub
The World Economic Forum ranks India 30th on the worldwide manufacturing index. Which assesses the manufacturing capabilities of quite 100 countries. The government’s “Make in India” initiative has played a crucial role in elevating the country’s position. Within the past three as well as four years, India improved on nine out of ten parameters for simply doing business.
Although there’s still an extended thanks to going before India becomes a pacesetter within the manufacturing arena. Companies within the automotive sector are embracing this chance to leverage as well as India as a hub for low-cost, high-quality products. After creating a robust value proposition in mini cars. India is gaining global recognition within the compact sedan and SUV category.
The potential for global disruptions
The global automotive industry is undergoing a cascade of disruptions. Which will reshape it in unexpected ways, and India is going to be no exception to the present. Four key trends as well as will shift markets and revenue pools, change mobility behavior, and build new avenues for competition and cooperation.
Electrification. Electrification has just begun as well as to begin in India. Factors like declining as well as prices of batteries and supportive policies from the govt are stimulating the segment’s growth.