If there’s one thing I can say with absolute conviction, it’s that my trips back to India are never dull. With over a billion people in the country, the roads in India are home to a dynamic blend of, well, everything from luxury cars to the humble scooter, with about a million bicycles and the odd animal thrown in. However, that very same population of 1.6 billion makes the Indian automotive sector a significant contributor to the global automotive landscape.
Hyundai’s IONIQ 9 Electric Vehicle is showcased at the Bharat Mobility Global Expo in New Delhi, … [+]
The economic outlook for India, as envisioned by experts, is mega promising, with projections of strong growth through 2030 amid a gradual rise in per capita and disposable income. When it comes to the automotive sector, I’m super excited with the current low ratio of 33 cars per 1,000 people, which presents an enormous opportunity for growth in the foreseeable future.
My automotive team at MarketsandMarkets recently completed a study on the Future of the Auto Industry in India, and they picked up these key developments:
India as a Future Automotive Hub
India’s Automotive Mission Plan 2047, the final draft of which is anticipated to be completed by June 2025, seeks to establish India as a global hub for automotive manufacturing and research and development (R&D). India is already the largest producer of two-wheelers, the second-largest producer of buses, and the third-largest producer of medium and heavy commercial vehicles in the world, and interestingly, will add production capacity for a further 4 million passenger vehicles by 2032.
MarketsandMarkets predicts the Indian automotive market, including passenger and commercial vehicles, will grow from 5.1 million units in 2023 to 7.5 million units by 2030, with the passenger vehicle segment reaching 6.0 million units. This will further solidify India’s position as the third-largest passenger vehicle market in the world.
Powerhouse of Consolidation
India’s automotive market for passenger vehicles is highly consolidated—I can count major players on my fingers on one hand. It’s also the only market in the global top 10 that is so consolidated. In fact, in 2024, just six OEMs—Maruti Suzuki, Hyundai, Tata Motors, Toyota, Kia, and Mahindra & Mahindra—held over 92% of the passenger vehicle market share. Of these, Maruti Suzuki had a whopping 42% share.
On the other hand, the market is dominated by homegrown players like the Hero Group, Tata Motors, Mahindra & Mahindra, and Ashok Leyland, who have now also become successful in international markets like India, such as Africa, the Middle East, and Asia, and LATAM (for two-wheelers). India is also considered to be a graveyard for new entrants, as Ford, Stellantis, and others have found out in the past. Nevertheless, one can learn from Hyundai, which in 2024 ran India’s largest IPO ever, raising USD 3.3 billion.
Chauffer Capital of the World, Highly Polluted and Congested Cities with Low Motorization Rate
India is the new chauffeur capital of the world. The loss of productive time in traffic has prompted many middle-class car owners to hire drivers. As a result, India is experiencing a rise in long-wheelbase (LWB) luxury vehicle sales that have advanced features for backseat occupants in contrast to features for the driver.
India’s PV motorization rate, currently the lowest among major economies, is projected to increase from 25 in 2020 and 33 in 2023 to 56 by 2032, though it can never hope to match Western countries Despite the growth and advances in the Indian automotive industry, India will never be able to catch China’s astronomical automotive industry market size, even over the next 15 years.
Legislation To Trigger Electrification, Safety, and Connected Car Features
If we look at the Indian automotive market, quite a few unique features are set to shape its future. I’ll talk about few: the introduction and implementation of BS7 norms, which, I believe, will pose significant challenges to manufacturers of ICE vehicles, particularly diesel-powered passenger cars. Set to come into force by 2030 (MnM analysts expect it to be delayed from 2027), BS7 norms will, one, force manufacturers to shift priorities from ICE vehicles, especially diesel-powered vehicles, to electric vehicles and, two, compel the government to improve the charging infrastructure to help further the adoption of EVs in the country. In line with this, my team of analysts at MarketsandMarkets predicts a sharp decline in the sales of pure ICE vehicles (both petrol and diesel) due to the implementation of BS7 norms—with a huge rise in battery electric and hybrid vehicles by 2032. Peak ICE in India is not expected before 2038.
Similarly, Bharat NCAP and the AIS197 mandate will promote higher value connected and safety features, resulting in Indian OEMs skipping level 1 ADAS features for level 2 features. Indian government policies, such as the Faster Adoption and Manufacturing of Electric Vehicles (FAME) II scheme, the Electric Mobility Promotion Scheme (EMPS), the PM Electric Drive Revolution in Innovative Vehicle Enhancement (PM E-DRIVE) scheme, and the Production-Linked Incentive (PLI) scheme for the automotive sector, will not only help companies focused on developing and manufacturing EVs and EV batteries but will also promote the localization of essential parts and components to create a stable supply and value chain within India fully exploiting strategies adopted by China.
PV and CV PARC to Double with Decline in Unorganized Sector and Growth of the Aftermarket
The vehicle parc (number of vehicles on road) is expected to double between 2020 (54.4 million) and 2030 (108.6 million), driving the aftermarket and used car sales market significantly—the used car sales market is set to triple in the same time frame. Interestingly, ~50% of the independent aftermarket constitutes the unorganized sector comprising local garages and open shops where the distribution and service network is fragmented and regional, contrary to the US and EU. In the future, the network is expected to consolidate and become more national.
- Dominance of Lower GVW and bigger SUV Vehicles
Size matters in India, too, but it comes in two extremes. In India, in commercial vehicle industry there is a higher demand for lower GVW vehicles (½ ton to 1-ton commercial vehicles such as the Tata Ace and the Mahindra Bolero) compared to 16-ton or heavier trucks, and 7–9 m buses instead of 18 m buses.
On the other extreme in passenger cars, India’s love affair with SUVs has been strong and expected to last. The demand for SUVs has increased sharply over the past few years from 32.4% in 2020 to over 50% in 2024 and is expected to cross 60% by 2030. However, the increased demand for SUVs in the passenger segment has come at the cost of hatchbacks and sedans, which are expected to see reduced demand and lower market share through 2030. The rising preference for SUVs has also encouraged manufacturers to produce E-SUVs, with Tata Motors’ ‘Curvv’ and Mahindra’s ‘BE 6E’ and ‘XEV 9E’ models being very popular.
Conclusion
There’s an interesting story I recall when talking about the Indian automotive industry. Japan’s Toyota Motors and India’s Hindustan Motors were formed around the same time in the 1940s. Today, Toyota has reached the pinnacle of the auto industry to become the world’s largest auto company, while Hindustan Motors, the car I learned to drive in, is, alas, nowhere to be seen. However, that said, the future of the Indian auto industry is one of growth, fueled by an overwhelming passion to lead the global automotive revolution, with every challenge sparking a new adventure, creating a path paved not with wheels but with dreams of technology and tradition forging a harmonious future. It is the dream of a billion people wanting to see India at the top of the automotive industry, humbling Western and Japanese giants. And with some of the top delegates from Japan and Korea taking photos of Mahindra’s new electric-origin SUVs at the recently concluded Bharat Mobility Global Expo 2025, this dream seems to be firmly on the way to becoming a reality.
