The past years have seen a steep rise in the car market in India. Millions of cars are sold by the entire car industry every year. Hence the sector makes up a significant part of the country’s economy. The government as well has very well acknowledged the importance of the car market in India and is taking steps towards strengthening it.
Like any major industry, the car market too has been going through ups and downs, especially in this era of Covid. However, the car market has been showing promising development since August 2020. The industry might take some time to get back to its full potential but experts say that it should get back at its feet by the end of 2021. As a car market enthusiast, you might be wondering what the latest trends are and want a car market report. That is what we are here for!
What changes could be seen in the car market size in India? What are the recent trends of the automobile market? What is the present car market report? Read on to know everything you need to know about the car industry today!
What Do You Need To Know About The Present Car Market In India?
The present car market is a diverse field of involved technologies. More and more people are accepting the benefits of buying a used car over a new one. Electric vehicles are making their (quite a grand) entry into the Indian car industry. People are looking for eco-friendly options to help save the planet from further damage. Hence the industry is on the edge of a significant shift from its traditional walking plank.
Some of the newly witnessed trends in the market are:
- Sales of automobiles on a constant increase, thanks to the growth drivers.
The growing urbanization in the country is causing an increased demand in the auto sector. This, in turn, is luring foreign investors to the Indian car market. Hence, despite Covid, the infrastructure of the auto market is constantly being supported by the wealthy. A study by Goldman Sachs has estimated India to become the third-largest auto market in the world by 2025.
- Government’s plans lining up in favor of the car industry.
Owing to the great effect of the car industry on India’s economy, the government of India has come up with various plans and schemes to support the car industry. The Automotive Mission Plan 2016-26 and National Electric Mobility Mission Plan 2020 are highly supportive of the auto market in India and promise great results.
- Indian car manufacturers are becoming globally competitive.
The PLI (Production Linked Incentive) Scheme and National Auto Policy enable the Indian car manufacturers to become globally competitive. This would mean matching international standards in the cars they produce. It would encourage the export of finished cars from India, adding to India’s economy.
- The onset of the electric car market in India.
In January 2021, Tesla’s CEO Elon Musk confirmed his intentions to enter the Indian car marketplace with his electric cars. Experts’ analyses’ predict a vast boom in the electric car market in India in the coming years. Electric car production in India is expected to reach 63 lakh units per year by 2027, according to IESA, soon taking over the entire car market.
- The glamour of the luxury car market in India.
The growing riches of Indian people in business are leading to a growth in the luxury car market in India. Luxury car companies investing in the Indian marketplace is another reason. The luxury car market in India is estimated to reach a value of over USD 2 Billion by 2026. Indian grounds are becoming fertile for car industries.
How Did Covid Affect The Car Market Size In India?
The deadly disease of Covid-19 or Coronavirus forced the entire world to stay in the confinement of their homes. A nationwide lockdown imposed in India was a prime example. While it kept becoming challenging for humans, the environment became a lot healthier.
The roads witnessed the disappearance of cars and other vehicles to a great extent, quite an adversary for the auto market!
The official year 2020-21 saw a drop in the sales of cars. This was primarily because of the majority of people staying indoors and the lost jobs. India had been moving progressively towards recession, and hence the purchase of cars became out of option for many.
- The decreased demand resulted in a significant impact on the revenues and profits enjoyed by the manufacturers. Moreover, the limitations in import and export became another problem for the Indian manufacturers. More than a quarter of the total auto parts used in India was being imported from China in 2019. This was inversely affected by the virus outbreak.
- The Indian manufacturers had to rethink their entire plan due to a shortage of funds. Many automakers had to cut down funds from their R&D sector to maintain their productions.
- Additionally, everything moved online, and so did the car market! The people who could still afford to buy a car opted for the online marketplace. Many platforms sprang up for the sale of used cars as well. Hence the auto sector saw the dominance of e-commerce in itself due to Covid-19.
The virus made a massive impact on the car market size in India, and, in a lot of ways! The prices, the manufacturers, the transaction type, and everything else saw a turnover. However, despite all of that, the car market in India is still on the rise and is expected to recover from the Covid impact soon.
The Indian car market, despite the setback of Covid, is expected to come back in full fledge shortly. Depending on the current scenario, the Indian car industry is estimated to reach a total value of USD 512 billion by 2026. The car industry holds a 7% share in India’s GDP in 2019 with a USD 222 billion market size. Not only physical dealerships but e-commerce platforms are also purchasing vehicles. Buying of used automobiles is on the rise, with e-commerce platforms coming up for the convenience of the customers.
The automobile industry is one of the most promising industries in India today. The billions of dollars worth of market cap are bound to support the Indian economy. The sector looks good for India’s future.