India Automotive Electronics Market to Cross $18 Billion by 2027: Counterpoint Research

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  • Automotive electronics sales will triple during the period, driven by rising income levels and increasing customer preference for in-vehicle digital experience.
  • The average electronic component cost per passenger vehicle is projected to reach nearly Rs 200,000 ($2,685) by 2027
pic credit: Counterpoint

India’s automotive electronics market is expected to cross $18 billion by 2027 with a CAGR of 17 per cent from $6 billion in 2020, according to the latest research from Counterpoint’s Smart Automotive Service. It said that automotive electronics sales will triple during the period, driven by rising income levels and increasing customer preference for in-vehicle digital experience.

The country’s overall automotive sales declined 26 per cent YoY in 2020. But we estimate that the next six years through 2027 will see a strong boost in automotive sales from this low point. This growth will be mainly driven by the rising adoption of advanced connectivity experiences and electrification across automotive mobility segments.

Passenger vehicles are expected to capture nearly two-thirds of the Indian automotive electronics market

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The average electronic component cost per passenger vehicle is projected to reach nearly Rs 200,000 ($2,685) by 2027. Stringent regulations like Corporate Average Fuel Efficiency II (CAFE II) and Bharat Stage-VI (BS-VI) are also among the key drivers for rising electronic content in a car.

Research Analyst Soumen Mandal said, “Passenger vehicles are expected to capture nearly two-thirds of the Indian automotive electronics market driven by the rising usage of telematics control unit (TCU), infotainment and other electronic components such as on-board diagnostics (OBD), electronic control unit (ECU) and anti-lock braking systems (ABS).

Telematics penetration in India remains low compared to global standards. However, rising awareness among people about advanced safety and communication services, coupled with more embedded connectivity service offerings by automakers, will drive this market in the future. Head-up display (HUD), blind-spot monitoring system, auto-dimming mirror, advanced driver assistance systems (ADAS) and automatic transmission features remain mainstream features for premium segment cars (cars with an ex-showroom price of more than INR 1,100,000).

India’s two-wheeler market will also see growing adoption of automotive electronics. Electric vehicle (EV) penetration in the two-wheeler segment was 1.0% in 2020 but is estimated to climb to 15 per cent by 2027, driven by favorable government policies like Faster Adoption and Manufacturing of Electric Vehicles II (FAME II) and rising consumer awareness of the green technology. This adoption is higher in the low-speed two-wheeler segment currently, but we expect it to increase in the high-speed segment in coming years.”

Mandal added, “In the three-wheeler category, electronics penetration is slower compared to passenger vehicles and two-wheelers. Embedded telematics and infotainment offerings are rare in three-wheelers considering this segment has the highest EV penetration among all vehicle categories. E-commerce will drive the telematics market, transporting specific products like groceries and home appliances during the forecast period.

The electronics market in the commercial vehicle segment is projected to cross $530 million by 2027. This is due to rising adoption of telematics and other new technologies like exhaust gas recirculation (EGR), selective catalytic reduction (SCR) and on-board diagnostics II (OBD II). Automotive Industry Standard (AIS) 140 and rising awareness among stakeholders are benefiting telematics penetration in commercial vehicles. Infotainment systems are present in premium buses currently but are restricted to basic audio systems. Infotainment systems are expected to penetrate mid and high segments during the forecast period.”

In the passenger vehicle and two-wheeler segments, customers continue to move towards higher price segments. Sales are expected to reach the 2019 levels only in a couple of years. The three-wheeler segment was impacted the most during the pandemic due to social distancing. On the other hand, commercial vehicle sales are benefitting from growth in the infrastructure and last-mile delivery sectors.

Digitization of cockpit, CAFE norms and EVs will drive the automotive electronics market in India. Touchscreen infotainment is also becoming popular in the passenger vehicle segment. However, the embedded infotainment market will remain negligible in the two-wheeler and three-wheeler segments.”

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