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Outlook of Automobile Industry in India: 2019

Snapshot

With sales increasing 9.5% year-on-year to 4.02 million units (excluding two-wheelers) in 2017, the Indian auto industry was ranked the fourth largest globally, and the seventh largest manufacturer of commercial vehicles in 2017.

Vroom Vroom

India’s two-wheeler sector is dominating the market in terms of volume. Why? A growing middle class and young population (comprising of millennials and Gen Z) are contributing to the two-wheeler growth here. Additionally, the growing interest of automotive companies in the rural market has further spiked growth in this area.

As a prominent auto exporter, India’s automobile exports have grown by 15.54% between April 2018 and February 2019. This figure is likely to grow at a CAGR of 3.05% from 2016 to 2026. And with several auto-focussed government initiatives—plus continued activity from automotive giants—the Indian two-wheeler and four-wheeler segment could be a world leader by 2020. Put simply, the automotive industry is fuelled up and ready to roll in India.

Market Size

Domestic automobile production was hiked up by 7.08% CAGR from 2013 to 2018 owing to the production of 29.07 million vehicles in 2018. From April 2018 to January 2019, production growth increased by 9.84% year-on-year and touched 26.26 million vehicle units.

Domestic automobile sales also increased, witnessing a growth of 7.01% CAGR between 2013 and 2018 owing to 24.97 million vehicles being sold in 2018. Between April 2018 and January 2019, domestic sales across all categories was the highest in commercial vehicles at 22.79%, followed by 14.79% year-on-year growth in three-wheeler sales.

With premium motorcycle sales in India crossed one million units in 2018, BMW recorded a growth of 11% year-on-year in its sales in India having reached 7,915 units sold. Electric two-wheelers are estimated to have crossed 55,000 vehicles in 2017.

The Road Ahead

The automobile industry is backed by several factors, such as the availability of skilled talent at a low cost, highly efficient R&D centres, and cheaper steel production. As a result, the automotive industry provides great opportunities for folks in the labor force.

The Indian automotive industry (export and manufacturing) is expected to reach the size of Rs. 16.16 — 18.18 trillion ($251.4 – 282.8 billion USD) by 2026. Finally, the two-wheeler segment is expected to grow 9% in the coming years.