Automobile Industry Analysis

The automobile industry in India is world’s fourth largest, with the country currently being the world's seventh largest commercial vehicle manufacturer. Indian automotive industry (including component manufacturing) is expected to reach Rs 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two-wheelers dominate the industry and had a 79 per cent share in the automobile production in FY17. Cumulative vehicle sales in India are estimated to have grown 13.5 per cent in FY18. Automobile exports from India increased 15.81 per cent year-on-year in April-February 2017-18. Indian automobile industry has received Foreign Direct Investments (FDI) worth US$ 18.41 billion between April 2000 and December 2017.

The passenger vehicle sales in India crossed the three million unit milestone during FY 2016-17, and is further expected increase to 10 million units by FY20.

The government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as a National Automotive Board to act as facilitator between the government and the industry. The Indian government has also set up an ambitious target of having only electric vehicles being sold in the country. Indian auto industry is expected to see 8-12 per cent increase in its hiring during FY19.

Alternative fuel has the potential to provide for the country's energy demand in the auto sector as the CNG distribution network in India is expected to rise to 250 cities in 2018 from 125 cities in 2014. Also, the luxury car market could register high growth and is expected to reach 150,000 units by 2020.