The Indian automobile industry is undergoing a significant transformation, marked by a shift in consumer preferences, advancements in technology, and stringent safety standards.
Historically, small cars dominated the market, accounting for about 70 per cent of sales. However, today's landscape shows a different picture, with SUVs now making up 53 per cent of the market.
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The transition from compact cars to larger, more aspirational SUVs is largely attributed to the rapidly improving road infrastructure—intracity roads, highways, and expressways—across the country.
Improved road infrastructure has spurred demand for vehicles capable of long-distance travel and heavy-duty performance. Increasing ownership of personal vehicles and the expansion of commercial fleets are major factors propelling the automotive components market in India.
As of January 2024, Total length of National Highways in India was 146145 km
The growing popularity of SUVs reflects consumers' desire for more robust, versatile vehicles. The shift from small cars to SUVs has necessitated substantial improvements in vehicle components and safety standards.
Components such as airbag controllers, anti-lock brake systems, and electronic stability mechanisms are vital in safeguarding passengers and reducing collision risks.
For example, Innovations in materials and design are enhancing the efficiency and dependability of airbags. Contemporary airbag technology features sophisticated sensors and algorithms that improve deployment accuracy and performance.
New developments, such as adaptive airbag systems that modulate the deployment force according to the impact severity, are increasingly being used.
Electronic systems are now integral to improving vehicle security. Through ongoing enhancement of safety features, the adoption of both active and passive safety innovations, and the utilization of electronic systems, the automotive industry is enhancing road safety for all, protecting lives, and fostering trust in the evolution of transportation.
CV & EVs
The automobile industry in India is also at the cusp of an electric revolution. Original Equipment Manufacturers (OEMs) are no longer just adapting existing platforms for electric vehicles (EVs); they are developing dedicated electric platforms.
Companies like Tata and Mahindra have already made strides in this direction, with Maruti Suzuki planning to follow suit. These bespoke electric platforms are designed to optimize the performance and efficiency of EVs, marking a significant departure from the earlier practice of modifying internal combustion engine (ICE) platforms.
The commercial vehicle (CV) sector too is witnessing parallel advancements. India is developing platforms that cater to both local and global markets, attracting international players like ZF, known for their vehicle components.
Akash Passey, President at ZF Group, India Region says, “Automotive technology is going through a big change. With the improvement of highways, the ability to carry heavier loads over longer distances has increased. This necessitates advancements in the Commercial Vehicle industry, particularly in braking systems, steering mechanisms, and overall vehicle stability.”
“Safety standards in the Indian automotive industry are seeing significant enhancements. The introduction of modern safety features such as lane departure systems and the government's push for electronic stability control (ESC) are pivotal in ensuring that vehicles do not slip on roads.
These regulatory measures are in line with global standards and reflect a commitment to safer driving experiences. The government's role in building better infrastructure and implementing stringent safety regulations is crucial in this context,” Akash explained.
Evolving Market
India has emerged as a key player in component manufacturing, with numerous companies producing top-notch parts at competitive rates, resulting in a substantial increase in exports to global markets.
According to the TechSci Research Report, the India Automotive Components Market was valued at USD 56 billion in 2023 and is expected to experience significant growth, with a projected CAGR of 5.34% in the coming years.
The Indian automobile industry is rapidly evolving, driven by a shift towards SUVs, the onset of the electric vehicle era, and significant improvements in safety standards. These changes reflect broader economic trends and consumer aspirations.
Despite these advancements, the Indian market remains highly cost-conscious. Manufacturers are challenged to balance the introduction of advanced safety features and new technologies with the need to keep vehicles affordable. This delicate balance is essential to maintain competitiveness and meet consumer expectations.
Reliance on imports for certain crucial components restricts market expansion. To address these issues, manufacturers are focusing on research and development to create affordable, high-quality components locally.
India is being looked at as a sourcing hub. Global companies are working with Indian suppliers to develop them and provide globally quality-competitive components, products.
Global players are planning to have local sourcing, prototyping, testing, validation, and manufacturing in India, as engineering for all components in Europe or the western countries is five times costlier and ten times more time-consuming than as compared to India.
Future Prospects
As vehicles advance towards greater autonomy and connectivity, the necessity for sophisticated sensors, communication networks, and computing capabilities is on the rise.
This trend presents new opportunities for the auto components sector to deliver innovative solutions that integrate these technologies smoothly into modern vehicles.
The Government aims to construct 65000 kms of national highways at a cost of ₹5.35 lakh crore (US$ 64.17 billion).
The government's support in building better infrastructure and enforcing stringent safety regulations will continue to be a crucial driver of growth and innovation in the industry.
Moreover, the rise of shared mobility solutions such as ride-hailing and car-sharing services is reshaping the way people view vehicle ownership. This shift is likely to lead to increased demand for vehicles that offer higher durability and lower total cost of ownership, further driving advancements in vehicle technology and infrastructure.
With the government’s support in building better infrastructure and enforcing stringent safety regulations, the automotive industry is poised for sustained growth and innovation.
The challenge remains for manufacturers to continue delivering advanced, safe, and affordable vehicles to meet the diverse needs of the Indian consumer. As the industry navigates these changes, it will play a pivotal role in shaping the future of transportation in India and beyond.
