Indian auto industry to reach US$ 300 bn by 2026

Passenger vehicles comprised 368,086 units, three-wheelers 56,723 units, and two-wheelers dominated with 1,487,579 units sold domestically

May 1, 2024

India's dominance in the automotive sector extends globally, making it the world's largest manufacturer of two-wheelers, with over 21 million units produced annually and the largest manufacturer of tractors

Government initiatives have also spurred growth, with total automobile exports from India reaching 47,61,487 units in FY23

As the industry gears up for further growth, recent developments such as Ola Electric's IPO and Mercedes-Benz's record half-yearly sales highlight the sector's dynamism and potential

With India poised to lead the EV revolution and solidify its position as a global automotive hub, the future of the Indian automobile industry looks promising and exciting

India’s automotive market is on track to hit a significant milestone, with projections estimating it will reach US$ 300 billion by 2026. This growth is attributed to various factors, including rising income levels, urbanization, and an expanding middle class with greater purchasing power.

In March 2024 alone, the Indian auto industry produced 2,325,959 units, spanning passenger vehicles, three-wheelers, two-wheelers, and quadricycles. Passenger vehicles comprised 368,086 units, three-wheelers 56,723 units, and two-wheelers dominated with 1,487,579 units sold domestically.

During the first quarter of 2024, the industry produced a total of 7,394,417 units across various segments, with passenger vehicles reaching 1,135,501 units, commercial vehicles 268,294 units, three-wheelers 164,844 units, and two-wheelers leading with 4,503,523 units sold domestically.

For the financial year from April 2023 to March 2024, the Indian automotive industry reported a total production of 284,347,742 units. This included 4,218,746 passenger vehicles, 967,878 commercial vehicles, 691,749 three-wheelers, and 179,743,365 two-wheelers sold domestically.

India’s dominance in the automotive sector extends globally, making it the world’s largest manufacturer of two-wheelers, with over 21 million units produced annually and the largest manufacturer of tractors. Additionally, it ranks as the third-largest heavy truck manufacturer and the fourth-largest car manufacturer worldwide.

Foreign direct investment (FDI) has played a significant role in the sector’s growth, with a cumulative equity FDI inflow of approximately US$ 35.40 billion between April 2000 and September 2023.

Government initiatives have also spurred growth, with total automobile exports from India reaching 47,61,487 units in FY23. These exports contributed substantially to the nation’s GDP and directly and indirectly employed approximately 19 million people.

India’s transition to electric vehicles (EVs) is gaining momentum, with projections indicating it will become the third-largest EV market by 2025, with 2.5 million vehicles expected on the roads. This presents a substantial investment opportunity of over US$ 200 billion over the next 8-10 years, with the EV market forecasted to grow at a CAGR of 49% between 2022 and 2030.

As the industry gears up for further growth, recent developments such as Ola Electric’s IPO and Mercedes-Benz’s record half-yearly sales highlight the sector’s dynamism and potential. With India poised to lead the EV revolution and solidify its position as a global automotive hub, the future of the Indian automobile industry looks promising and exciting.

Source: Economic Times

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