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AUTOMOTIVE
INDUSTRY OUTLOOK
Overview of Indian Automotive Industry
Domestic Automobile Market Major players Auto manufacturing clusters

Two Passenger Commercial Three

3% 1%
15% Wheelers Vehicles Vehicles Wheelers
Delhi – Gurgaon -
Hero MotoCorp Maruti Suzuki Faridabad
Tata Motors Bajaj Auto
37% 46% Kolkata -
37.26% 50.6%
Jamshedpur
Honda Motor Hyundai M&M Piaggio
26% 16% 29.4% 29%
81% TVS Tata Motors Mumbai – Pune –
Ashok Leyland M&M
14% 9.2% 12.79% 9.5% Nashik –Aurangabad
Two-wheelers Passenger vehicle Bajaj Auto KIA Motors VECV Atul Auto
Commercial vehicles Three wheelers 12% 6% 5.12% 7.1%

Automobiles Production and Sales Chennai – Bengaluru -

Hosur
Production Sales

35 35 Domestic Exports
30.92
Unit sales (in millions)
Units produced

29.07 30
30
(in millions)

25.33 26.36
4.1
4.7 Advantages of these clusters:
25 22.65 25 4.8
3.5
20 20 4.0 Special incentives provided by
12.95 local governments
15 15
25.0 26.3
10 10 21.9 21.6 4.8
18.6 Presence of sector specific labour,
5 5 8.2 knowledge & industry linkages
0 0
FY17 FY18 FY19 FY20 FY21 FY22 FY17 FY18 FY19 FY20 FY21 FY22 Closely knit supply chain ensuring
(Till (Till uninterrupted production
Oct) Oct)

Source: 1. IBEF – Automobiles 2. MarketLine – Automobiles in India

© Management Development Institute, Gurgaon | 2021 - 2022 2
Key drivers fuelling growth of Automotive
Support Infrastructure & High
Policy Support Investments
▪ Initiatives like Make in India, Automotive
▪ $117M spent under the FAME-II scheme
Mission Plan 2026, and NEMMP 2020 to
supporting ~87,000 electric vehicles through
give boost to the industry
various different incentives
▪ Voluntary scrappage policy introduced in
▪ ~6,000 electric busses sanctioned to various
budget 2021-2022 will boost demand for new
state/city transportation undertakings
vehicles after removing old unfit vehicles
from the roads ▪ In July 2021, India inaugurated the National
Automotive Test Tacks (NATRAX), Asia’s
▪ Various public sector firms, ministries &
longest high speed track to facilitate
railways are coming together to setup
automotive testing
infrastructure & manufacturing components
for electric vehicle supply equipment (EVSE) ▪ In the last 2 decades, automobiles sector
received 5.5% of the total Foreign Direct
Investment (FDI) inflows to India

Growing Demand Electric Vehicles

▪ Between January & July 2021, EV
▪ Rising income and the middle class population component makers, EV makers & last mile
(on track to reaching 55% by 2025) delivery companies invested $3.67B.
▪ Easier availability of credit & financing services ▪ $25M invested in India to setup lithium ion
▪ High level of activity in infrastructure sector battery manufacturing unit & battery
fuelling the demand of commercial vehicles swapping infrastructure.

Source: 1. IBEF – Automobiles 2. MarketLine – Automobiles in India

© Management Development Institute, Gurgaon | 2021 - 2022 3
Volatility in the Automotive Industry
Factors driving volatility

Geopolitical Issues Stricter regulation Business Model Shifts

• Trade agreements • Transition from BS4 to BS6 • Connected, autonomous,
• Nationalism, protectionism • NCAP for Safety shared & electric (CASE)
e.g. China • Real Driving Emissions (RDE) disruption)

Consumer Preferences Supply chain issues Technology changes

• Online sales, D2C • Disruptions (chip shortage) • Connected services (5G)
• Inter-segment & intra- • Currency volatility • Speed of computing
segment shifts • Localisation focus • Digital transformation

Impact of Chip Shortage CASE Disruption

Volume losses (in thousands) Connected Autonomous Shared Electric

Q1 2021 Q2 2021 Q3 2021
Vehicle centric & Useful functions & Shared mobility Battery electric
0
-342
-114
-164
B2C services features are models expected vehicles (BEVs)
-476 Global
-146 expected to grow paving way for L4 to account for 15- expected to grow
-500 -354 from $8B to $66B autonomous 24% of vehicle- at ~23% CAGR till
-48
-503
-365 by 2035 driving based mobility by 2027
-1,000 2030
-140 -384
-167
-1,500 -192 75% of connected L1/L2 autonomous Micro-mobility Strong growth is
-293 India car features vehicles expected start-ups are expected in e-two
-2,000 related to vehicle, to hit Indian roads gaining increasing wheeler segment
Europe North America mobility & security by 2027 acceptance
China Japan/Korea
Rest of the world

Source: 1. IBEF – Automobiles 2. PwC – Living With Volatility

© Management Development Institute, Gurgaon | 2021 - 2022 4
Future of Electric Mobility Ecosystem in India
India’s Electric Vehicles market is expected to grow to $7.09B (₹50,000 crore) by 2025 as per the latest IBEF estimates.

Potential for OEMs in the EV space

Battery Battery System Body Design & Body Parts Assembly

Manufacturing Design Engineering Manufacturing
The battery Intelligent BMS Body Design of As the powertrain Due to significant
manufacturing systems are automobiles to be is lighter than reduction in the
market in India is necessary to completely traditional engine, no. of parts in an
expected to grow safeguard users, overhauled to aluminium is electric engine,
at 15% CAGR for monitor cell usage replace traditional being replaced by assembly line
the next 5 years & optimize engine with the low cost materials requires a
consumption powertrain to offset weight complete overall

Role of the government

As Policymakers and Regulators As Designers and Developers

▪ Ensure public welfare, safety and security, while enabling ▪ Invest to build an ecosystem that is ready for the future
stakeholders to navigate this new field ▪ Build infrastructure to support new technologies, create
▪ Implement policies and regulations which are “tech agnostic” demand for new mobility services & build capabilities

As Researchers As End Users

▪ Help foster technological innovation by allocating funds, making ▪ Increase state operated fleets, invest in infrastructure and
decisions & approving grants in a fast speed spur adoption of shared mobility, electrification and new
▪ Balance development with public safety as technologies are business models by their procurement decisions
adopted
Source: 1. Mordor Intelligence – EV Market in India 2. Deloitte – Future of Mobility 3. McKinsey – Trends in electric vehicle design
© Management Development Institute, Gurgaon | 2021 - 2022 5
Opportunities for OEMs in Data Ecosystem

Digital Infrastructure Content Provider External revenue Predictive maintenance

Enabler stream & ride assistance

▪ Digital Infrastructure will be ▪ Shared mobility provides an ▪ OEMs are exploring ▪ Features such as
equally important in the opportunity to sell content, opportunities which can preventive care & service
future as physical entertain & enhance time leverage data collected by recommendations,
infrastructure. spent in transit. users to help them customized driving
monetize. suggestions, collision
▪ OEMs can expand their ▪ Several automakers have
avoidance & AI drive
offerings by including in- already stuck deals with ▪ Services such as user
assistance are gaining
vehicle sensors, operating content providers to stream based insurance, mobile
widespread acceptance.
system & data aggregation audio & video to vehicles. commerce, mobility as a
and analytics. service (MaaS), ▪ This can also help OEMs &
▪ Concepts such as AR
behavioural and geo-based automobiles dealerships
▪ This would enable OEMs to windshields can enable high
advertisement, optimize their parts
study consumer behaviour & quality content creation,
infotainment & personal inventory and strategize
help them design better and targeted advertisement and
customized customer health monitoring are being technician resourcing to
product placement.
actively worked on. optimize their operations.
experiences.

Source: 1. Deloitte – Future of Mobility

© Management Development Institute, Gurgaon | 2021 - 2022 6
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