The automotive sector in India demonstrated notable growth in FY25, with passenger vehicle sales increasing by 4.9 per cent y-o-y and total vehicle registrations reaching 26 million. This expansion was led by the robust performance of two-wheelers and three-wheelers in rural markets, reflecting rising rural incomes and surging consumer demand. This dynamic is redefining India’s domestic automotive landscape, fueled by emerging opportunities.
Growth and expansion of India's automotive sector is further accelerated by advancements in key supporting industries such as auto components, tyres, natural gas and steel. Innovations in these sectors enhance cost-efficiency, vehicle performance and sustainability, fostering a more competitive and technologically advanced automotive landscape. These developments are solidifying India’s presence in the global market, driving sustained growth and fostering innovation across the industry.
As the sector continues its upward trajectory, it is strategically positioned for transformative growth in the near term, driven by 5G machine-to-machine (M2M) connectivity and sophisticated AI integration, surpassing traditional 4G frameworks. In-vehicle computing, powered by generative AI (GenAI) and robust cloud applications, is expected to enhance real-time data processing, optimising navigation and predictive maintenance for safer and more efficient mobility. With the Indian passenger car market projected to reach around USD55 billion by 2027, these technological innovations are expected to play a crucial role in shaping industry growth and consumer adoption.
The newsletter delves into the insights from ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø International’s 2024 Industrial Manufacturing and Automotive CEO Outlook, which highlights strong optimism towards the adoption of GenAI. Around 63 per cent of automotive CEOs view GenAI as a top investment priority for achieving growth, signaling not only strong confidence in its transformative potential but also a strategic shift towards embracing digital solutions in the sector.
Furthermore, the newsletter captures significant industry developments across multiple segments, with electric vehicles (EVs) taking centre stage. EVs surpassed sales of two million units in CY24, bolstering their position in the evolving automotive landscape. However, high initial costs, reduced subsidies and shifting consumer sentiment have resulted in a slowdown in two-wheeler and car registrations. To counter these headwinds, sustained investment in infrastructure, proactive policy measures and efforts to enhance consumer awareness may play a pivotal role in fostering long-term EV adoption in the country.
Looking ahead to FY26, India's automotive sector is poised for sustained growth, supported by new model launches and increasing consumer interest in EVs. While expansion across two-wheelers, passenger vehicles and commercial segments remains strong, market dynamics continue to be shaped by access to financing, evolving consumer preferences and potential U.S. tariff developments. To mitigate these risks, expansion and modernisation of EV infrastructure, green manufacturing facilities and innovations in technology integration remain crucial.
In tandem with the supply-side technology advancements, implementing robust consumer-focused strategies such as offering attractive financing options and comprehensive after-sales services can help build consumer confidence and facilitate seamless adoption of emerging market trends.
This integrated approach can set the stage for India to emerge as a strategic global player, driving economic growth and promoting environmental responsibility.
