The Indian automotive industry was estimated at a value of over USD 80 billion in 2016. The industry is anticipated to register a double digit CAGR over the forecast period (2018 – 2023).
Expanding Automotive Manufacturing Sector in India
The Indian automotive manufacturing sector is expanding at a fast rate, which is making the country one of the fastest-growing automotive manufacturers in the world. With an annual production of nearly 4.5 million units in 2016, the country was the fifth-largest automobile manufacturer in the world, falling behind China, the United States, Japan, and Germany. The country’s automotive industry was the second-fastest growing among the top 10 vehicle manufacturers, with an annual growth rate of 7.9%, which was second only to China in 2016. The annual vehicle production in the country grew from 3.89 million units in 2012 to 4.49 million units during the same year. In addition to this, the country’s Automobile Mission Plan aims to lead India to be among the top three automobile manufacturers in the world by 2026. Incentives from the government, rising disposable income, lower auto financing interest rates, increasing FDI in the automotive sector, along with the country being ranked at 30th position in the global manufacturing index by the World Economic Forum, are the factors expected to drive the automotive industry in the country, registering a CAGR of over 10% over the forecast period.
Booming Vehicle Ownership Rate in the Country
Two-wheelers accounted for the lion’s share of automotive sales in the country, followed by the passenger vehicle segment. Rising income level in the country, along with the increase in the young population, is driving the Indian automotive market. With over 17.5 million two-wheeler sales in 2017, India has currently become the largest two-wheeler market in the world, crossing China.
In addition to the two-wheeler sales, India was also among the top passenger and commercial vehicle markets, with annual sales of 3.6 million units in 2016. Changing demographics, increasing female drivers’ count on road, and rising income levels of young consumers, are driving the two-wheeler market in the country.
The number of motor vehicles per 1,000 people was about 53 in 2001, which more than tripled to reach 167 per 1,000 people in 2015. The number of cars per 1,000 people in the country is expected to double to become 40 cars per 1,000 people by the end of the forecast period. Besides the two-wheelers and passenger vehicles, India is the largest tractor market and manufacturer in the world. With the rapid growth in vehicle ownership in the country, OEMs are increasing their presence by expanding their manufacturing, assembling, or sales volume in the country.