Mobility Blog

Trends in Indian Automotive Industry

Trends in Indian Automotive Industry

The Indian automotive industry has traditionally been a good indicator of how well the economy is doing, particularly in its contribution to the country's manufacturing output and employment generation.

Today, against the backdrop of a post-Covid resurgence, the Indian auto industry is well on its way to becoming the third-largest automobile market in the world.

We've identified a few trends that will define the future of the auto industry in this ever-evolving landscape. Have a read. 

Digitalisation: Driving better customer experience

Customers are increasingly looking up cars online. Right from enquiry to delivery, the digital transformation in the auto industry looks to take various customer touchpoints online. Customers benefit from a much more personalised and user-friendly experience, while carmakers and dealers can target and engage with them better. 

The adoption of digital transformation is fuelled by a much-needed customer-centric approach. This drives the use of platforms like social media and advanced technologies like Augmented Reality (AR) and Virtual Reality (VR) to add value to the customer experience. Increasingly, even post-sale services like maintenance and insurance are offered online, enabling easier processes and hassle-free vehicle management. 

Electric Vehicles: A fast-growing reality

Estimated to grow at a CAGR of 44% between 2020-27, the EV market is buzzing with new players, with a boost from Government incentives. The growth of electric mobility is backed by removing the battery from the new vehicle sales, leading to less upfront cost, reduced GST, and a growing acceptance and interest in consumers, for alternate-engine cars and sustainable mobility solutions

The growing popularity of EVs is a great opportunity for corporates and businesses to redefine their mobility, and to adopt greener fleets with EVs and PHEVs. This not only helps businesses reach their sustainability targets, but may also help in cutting costs, in the long term. 

Vehicle Connectivity: Beyond just a car

Still in the early days, but Indian roads are seeing a growing number of 'connected' vehicles. With car brands like MG and KIA launching successful models with factory-fitted connectivity features that allow internet access and data sharing with external devices, consumers seem to have taken to the trend. This reflects in the projection of about 1.7 million connected cars on Indian roads by 2022.

Telematics: Using tech to optimise fleets

Businesses and corporates are constantly looking to better their mobility, especially when it comes to car fleets. Technology is at the core of this modernisation, as we see in the rising trend of using Telematics and data in the optimisation of company fleets. One of the fastest-growing sectors, it is surging on with a CAGR of about 16% (2016-20). Telematics can enable navigation, safety, security and communication, while providing useful data on the fleet's performance. 

Scrappage Policy: Impact and opportunities

With the scrappage policy coming into effect on Oct 1st 2021, individuals and companies need to be mindful of its impact on their car plans. The policy seeks to phase out old vehicles and reduce vehicular pollution, while improving road safety and efficiency. Customer who have scrapped their old cars are being offered incentives during the purchase of new vehicles. This move could reflect in a rising demand for new vehicles in the market. 

With the mandatory fitness tests after 15 years of ownership, the costs of renewing registration and the various cesses, the use of old vehicles will cost a lot more, making it important to look for alternate mobility solutions, like car leasing, that enable easy, timely upgrades and drive efficiency. 

Reduced ownership period leading to rise in used car market

The used car market has seen a steady growth of 6.2% between 2016 and 2020, despite a slowdown in new car sale during the same period. This trend is owed to the rising numbers of millennials in the workforce. Changing consumer behaviour has reflected in the reduced ownership period of cars, which now stands at around 3-5 years. Other factors like the transition from BS-IV to BS-VI, GST rates differential on purchase of a used car vs new car, etc. also contribute to this trend, which is still growing, as more people prefer a personal vehicle versus public transport. 

Emerging profit centres and the rise of car leasing

In recent times, we’ve seen that new models and mobility solutions such as car leasing, subscription, data monetisation and shared mobility etc. have emerged as new profit centres. This can be attributed to the rise of vehicle utilisation due to shared mobility and the saturation of vehicle ownership in developed countries. Car leasing, in-vehicle connectivity, subscriptions and long-term maintenance packages are expected to capture a large share of the profit pool. 

In conclusion, these disruptive trends across areas like changing customer preferences, digitisation, electrification, government reforms, technological advancements and evolving financing models offer a chance for the auto industry to reinvent. 

And at ALD, we constantly keep a finger on the pulse and work towards staying on top of these rising trends in the auto industry. This helps us meet the ever-changing mobility needs of our customers, and help them adapt to changing times via our efficient vehicle leasing solutions.