Indian auto industry poised to reach USD 300 Billion by 2026; Revving up for innovation and expansion
India’s auto market is on track to reach a significant milestone, with projections pointing towards a USD 300 billion valuation by 2026. This growth is being driven by factors such as increasing income levels, urbanization, and a growing middle class with higher purchasing power.
In March 2024, the Indian auto industry produced a total of 2,325,959 units, covering Passenger Vehicles, Three-wheelers, Two-wheelers, and Quadricycles. Passenger Vehicles accounted for 368,086 units, Three-wheelers saw 56,723 units, and Two-wheelers dominated with 1,487,579 units sold during the month.
During the first quarter of 2024, the industry produced a total of 7,394,417 units, with Passenger Vehicles recording 1,135,501 units, Commercial Vehicles reaching 268,294 units, Three-wheelers standing at 164,844 units, and Two-wheelers maintaining strong performance with 4,503,523 units sold.
For the financial year from April 2023 to March 2024, the Indian automotive industry reported a total production of 284,347,742 units. Passenger Vehicles accounted for 4,218,746 units, Commercial Vehicles saw 967,878 units, Three-wheelers recorded 691,749 units, and Two-wheelers dominated the market with 179,743,365 units sold during the same period.
India is the world’s largest manufacturer of two-wheelers, producing over 21 million units annually, and the largest manufacturer of tractors. It also ranks as the world’s third-largest heavy truck manufacturer and fourth-largest car manufacturer.
The sector has been attracting foreign direct investment (FDI), with a cumulative equity FDI inflow of about USD 35.40 billion between April 2000 and September 2023.
The government’s initiatives have fueled growth, with total automobile exports from India reaching 47,61,487 units in FY23, contributing significantly to the nation’s GDP and providing employment to about 19 million people directly and indirectly.
India’s shift towards electric vehicles (EVs) is gaining momentum, with projections indicating it will become the third-largest EV market by 2025, with 2.5 million vehicles expected on the roads.
The automotive industry is witnessing a trend towards larger and more powerful vehicles in all segments, with increasing demand for Utility Vehicles (UVs) and Medium & Heavy Commercial Vehicles (M&HCVs).
Initiatives such as Make in India, the Automotive Mission Plan 2026, and the National Electric Mobility Mission Plan 2020 are supporting the industry’s growth trajectory. The revamped Vehicle Scrappage Policy and the introduction of Bharat NCAP highlight the government’s commitment to fostering innovation and sustainability in the sector.
The Indian passenger car market is expected to reach USD 54.84 billion by 2027, with a CAGR of over 9% between 2022-27. The global EV market is projected to grow fivefold to USD 1,318 billion by 2028.
Recent developments such as Ola Electric’s IPO, Mercedes-Benz’s record sales, and government incentives for clean technology vehicles showcase the sector’s dynamism and potential.
With India leading the EV revolution and solidifying its position as a global automotive hub, the future of the Indian automobile industry looks promising. The sector offers opportunities for both domestic and international players, with companies investing heavily to capitalize on this lucrative market.
The automotive aftermarket segment in India is also set to soar, with forecasts suggesting it will reach USD 32 billion by 2026. This segment encompasses services and products such as vehicle parts, accessories, maintenance, and repair services.
The CEO of Gavansa Enterprises believes that collaboration and innovation are crucial for success in the automotive industry. He sees the industry at the forefront of addressing environmental challenges and consumer demands through technological advancements.
The increasing demand for aftermarket products and services is being driven by factors like growing vehicle parc, rising consumer awareness, and a shift towards vehicle customization. The auto components industry in India is gearing up for exponential growth in exports, with projections indicating a fivefold increase in the next 10 years. Competitive pricing, quality standards, and technological advancements are expected to drive this robust growth in exports.