Automotive Industry Outlook 2022: Recent Trends and Initiatives

Automotive industry outlook is one of the most important industries of the Indian economy, and it serves as a barometer for the country’s current situation to a large extent. While India’s automotive industry has encountered numerous hurdles, including the disastrous COVID-19 pandemic, its development potential is undeniable. Indeed, as companies raise production, the sector will generate 65 million new employment in India by 2026. In FY21, India produced 22.65 million vehicles, with 13 million automobiles built between April and October.

Automotive industry outlook 2022: Market Size

The demand for automobiles in India will exceed 6,920,991 units by 2027, with a Growth of 11.3 percent from 2020 to 2027. The rising adoption of innovation and the government’s solid policy encourage car demand. Furthermore, growing environmental awareness leads to the use of alternative fuel cars (CNG, EVs), which boosts market expansion.

Passenger car sales climbed by 26.6 per cent to 3.08 million units in 2021, up from 2.43 million units in 2020. In the year 2021, 3680 luxury motorcycles were bought in India. This was a 21% rise over the 2020 figures.

Technological advances throughout the supply chain are expected to propel the industry over the next seven years. Companies, for example, selling vehicles through multiple channels such as e-commerce websites. Selling commercial vehicles via e-commerce websites assists OEMs in expanding their distribution network while lowering infrastructure and personnel expenses.

Automotive industry outlook 2022: Past Challenges

In the future years, the Indian car industry will face significant problems. In the car manufacturing sector, entrepreneurs face numerous hurdles. Changes in government laws, the global economy, relative prices, and market dynamics do strategic planning for the automobile sector complex.

The following are the three most important difficulties that are at the heart of these major critical concerns in the Indian automobile industry:

China’s ever-expanding market: China has been the world’s largest auto market for the past fifteen years. The country has been able to surmount other structural and competitive hurdles due to the volume expansion. The biggest issue for automobile market planners is to devise a strategy that considers China’s future.

Increased competition: among the many concerns confronting the automotive industry, one of the most important is the flattening of sales demand in mature countries such as Europe and Japan and increased competition from other manufacturers. The increase in competition is exactly proportional to the sales slowdown.

Balancing technological and government demands: The major worldwide vehicle markets have been subjected to strict legislation to reduce carbon dioxide and other engine exhaust emissions. This is done to save money on gas. However, making the correct powertrain and technology choices to accommodate shifting social demands in an evolving regulatory environment is one of the industry’s greatest difficulties.

Current Car services market: Top 3 trends

The contribution of the Indian automotive industry to the nation’s manufacturing production and employment generation has always been a good measure of how well the economy is performing.

Today, the Indian car industry is on its way to becoming the world’s third-largest automobile market, thanks to a post-Covid revival.

Vehicle Connectivity: It’s Not Just About the Car

Although it is still early days, India’s roads are seeing an increase in ‘connected’ automobiles. Consumers appear to have taken to the trend, with carmakers like MG and KIA producing successful models with factory-installed connectivity capabilities that allow internet communication and information exchange with external devices. By 2022, around 1.7 million linked automobiles are expected to be on Indian roads.

Digitalization Era

Customers are increasingly searching for automobiles on the internet. The auto industry’s digital transformation aims to bring various client touchpoints online, from inquiry to delivery. A much-needed customer-centric approach is driving the acceptance of digital transformation. This motivates the use of social media platforms and modern technologies such as Augmented Reality (AR) and Virtual Reality (VR) to enhance the consumer experience. Even after-sale services like maintenance and insurance are increasingly offered online, allowing for more efficient workflows and hassle-free car administration.

Electric vehicles: The new future

The rising popularity of electric vehicles (EVs) presents a fantastic opportunity for organizations and enterprises to rethink their mobility and embrace greener fleets using EVs and PHEVs. This aids firms in achieving their sustainability goals, but it may also help in cost reduction in the long run.

Direct sales to consumers

Automobile manufacturers have begun experimenting with new internet business models in response to shifting client buying habits. The majority of current attempts, on the other hand, are still far from what customers want.

Consumers have become accustomed to having things delivered to their doorstep due to greater digitization. While this has become commonplace for consumer products such as groceries, large-ticket purchases such as automobiles are likely to follow suit in the coming years. Several mobility firms have already begun to sell their products directly to customers, or D2C, business models.

Current Car services market: Recent investments in the automotive industry

Several manufacturers have begun to invest heavily in various aspects of the business in recent months to meet rising demand. As a result, overseas investment in the industry totalled US$ 30.78 billion between April 2000 and September 2021, accounting for 5.49 per cent of total Direct investment.

The below are among India’s recent/planned car investments:

  • In January 2021, Ashok Leyland, the country’s leading vehicle manufacturer, collaborated with Aidrivers, a global leader in AI-enabled driverless solutions for industrial mobility, to create Automation autonomous cars to satisfy the demands of a sustainable society.
  • HOP Electric Mobility, a diverse business venture of Rays Power Infra, will spend Rs. 100 crore over the next two years in growing its EV manufacturing capability.
  • In December 2021, TVS Motor Company & BMW announced a two-wheeler EV deal, with aspirations to launch their first electric two-wheeler during the next two years.
  • In December 2021, Hyundai declared intentions to invest Rs 4,000 crores in R&D in India to release six electric vehicles before 2028.
  • Skoda Auto revealed plans to begin manufacturing electrified vehicles in India in November 2021. 
  • In November 2021, Hero Motor (HMC), the parent company of Hero Cycles, announced a joint partnership with Yamaha to create electric motors for e-bikes for the international market.
  • To meet India’s EV goals, a total investment of Rs. 12.5 trillion in auto manufacturing and charging stations will be required until 2030.

Automotive industry outlook 2022: Government initiatives and achievements

The Indian government promotes international investment in the automobile industry by allowing 100 percent FDI through the automatic method.

The Indian government has recently made the following initiatives:

  1. Mr Nitin Gadkari, India’s Minister of Road Transport and Highways, announced plans to roll out Bharat NCAP, the country’s own car safety assessment programme, in February 2022.
  2. Twenty carmakers were chosen to get production-linked incentives in February 2022 as part of the government’s strategy to enhance domestic vehicle manufacture and attract new investment. A total investment of roughly Rs. The 20 vehicle makers have proposed 45,000 crores.
  3. The government implemented a battery-swapping programme, allowing drained batteries to be swapped for charged ones at approved charging stations, making electric vehicles more appealing to potential buyers.
  4. The Union Government added >100 advanced technologies to the PLI scheme for automobiles in November 2021.
  5. The Indian government announced a PLI scheme for automobiles and automotive parts worth Rs. 25,938 crore (US$ 3.49 billion) in September 2021. 
  6. In August 2021, Prime Minister Narendra Modi announced the Vehicle Scrappage Policy, which intends to phase out outdated, polluting automobiles sustainably.

Achievements in the current car services market in India

India is the world’s leading manufacturer of 2 stroke and three-stroke engines and the fourth-largest maker of passenger cars.

  • Maruti Suzuki Toyota India Private Limited (MSTI) has opened a Vehicle Scrapping and Recycling Facility in Noida, covering an area of 11,000 sqm and capable of handling 24,000 vehicles annually with the goal of building an environment for transitioning out unsuitable and harmful automobiles from Indian roads.
  • BHEL has spent roughly INR 30 crore on R&D and holds 34 patent laws.
  • The Steam Turbine and Generator equipment for India’s first of its kind, the greatest 700-megawatt electrical Pressurized Heavy Water Reactor, was supplied by BHEL.
  • Power Grid Corporation of India Limited (POWERGRID) has begun constructing Meghalaya’s first-ever Electric Vehicle Charging Station (EVCS).
  • Green Hydrogen Fuel Cell Electric Vehicle (FCEV) – Toyota Mirai, only one of its type projects in India, intended to create a Green Hydrogen based ecosystem in India, has been built using the world’s most powerful technology.
  • The Ministry has approved 2877 public EV charging stations in 68 cities in the Heavy industry.
  • The Rocky Mountain Institute (RMI) and NITI Aayog presented a research today titled “Banking for Electric Vehicles in India,” highlighting the need for priority-sector identification for retail financing in the thee – mobility environment.

Final Note

The Indian automotive industry outlook 2022 will be worth Rs 16.16-18.18 trillion by 2026. It relies on the availability of low-cost trained labor, strong R&D facilities, and low-cost steel manufacturing. It offers excellent investment options and job opportunities for skilled and unskilled people. 

Automotive industry outlook 2022: FAQs

1. How big is the current car services market in 2022?

As of 2022, the current size of the automotive industry is 86.2 billion dollars.

2. Which is the largest automotive manufacturing company in India?

Maruti Suzuki is the largest automotive manufacturing company in India. Maruti Suzuki holds 49 per cent/ share in the passenger automobile market and has been in the business for the past 30 years.

3. Why is the automotive industry growing?

There are numerous causes for Indian manufacturers’ extraordinary growth during the previous two decades. The key advantages have been a big untapped domestic market for small automobiles, low production costs (access to low-cost labor, and strong engineering skills. International connections and tie-ups also aided in advancing technology and the expansion of the industry’s manufacturing scale.

4. What is the growth rate of the automotive industry?

The demand for automobiles in India is set to exceed 6,920,991 units by 2027, with a Growth of 11.3 percent from 2020 to 2027.

5. Which car company has the biggest market share?

As per 2021 reports, Toyota has the biggest market share of 10.5 per cent.

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