Indian Economy News

India may outpace China in car sales growth, says Moody's Ratings

Moody’s Ratings stated on May 27, 2025, that India’s car sales are projected to grow at a compound annual growth rate (CAGR) of 3.5% — the highest in Asia — reaching around 5.1 million units annually by 2030. Indian carmakers are also making significant investments in lithium-ion cells, electric vehicles (EV), and battery manufacturing, with cumulative investments of Rs. 85,420 crore (US$ 10 billion), despite EV penetration currently standing at just 2%. Moody’s estimates that if 9–10% of two-wheeler owners upgrade to entry-level cars, it would generate replacement demand of at least 1.6–1.8 million units by the end of the decade. With average annual sales of 3.1 million over the past decade, this demand is expected to drive the market up nearly 25% from 4.2 million units in 2024.
Currently, Japanese, Korean, and Chinese companies hold over 70% of India’s market, but domestic players are expanding their footprint. In 2015, Tata Motors and Mahindra & Mahindra held just 11% of the market, which rose to 24% by 2024. Hyundai Motor Group, including Hyundai Motor Company and Kia Corporation, increased its share to 20% in 2024 from 18% in 2015. Meanwhile, Chinese firms remain minor players, holding around a 1% market share. In comparison, the collective share of Japanese automakers has declined to 51% in 2024 from 61% in 2015. India’s car industry has grown by 60% — from 2.6 million units in 2015 to 4.2 million in 2024 — making it the world’s third-largest automotive market after the United States and China. With only 44 vehicles per 1,000 people compared to Japan’s 502, Korea’s 422, and China’s 251, India’s young population and rising disposable incomes position it as a central focus for both domestic and foreign automakers’ growth strategies.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.