India Passenger Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The India Passenger Car Market is segmented by Vehicle Type (Hatchback, Sedan, SUV and MUV) and Fuel Type (Petrol, Diesel, and Other Fuel Types). The report offers market size and forecast in value (USD Billion) for all above mentioned segments.

Market Snapshot

India Passenger Car Market Outlook
Study Period: 2018-2027
Base Year: 2021
CAGR: 9 %

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Market Overview

The Indian passenger car market was valued at USD 32.70 billion in 2021, and it is expected to reach a value of USD 54.84 billion by 2027 while registering a CAGR of over 9% during the forecast period (2022-2027).

The COVID-19 pandemic had limited domestically produced passenger vehicles, and their production declined due to the shutdown of manufacturing facilities and lockdowns. With the stringent social distancing norms and nationwide lockdown imposed, the production units of different OEMs were completely shut down, and the raw material transport was halted, directly or indirectly affecting thousands of dependent workers, and the entire industry stumbled. Although it was not a complete disaster for the market, Indian-origin manufacturers like Tata Motors and Mahindra lost a good market time when their cars were picking pace in terms of safety and popularity.

Over the long-term market is expected to have steady growth owing to rising sales of passenger cars and the gradual shift of consumers from transportation to comfortable/convenient transportation and from convenient transportation to luxurious and safe transportation. In addition, Increasing investments and product launches by major OEMs into the country and their focus on localizing supply chain facilities to create a positive outlook in the market.

The Indian automotive industry has shifted from a components manufacturer to an assembler and manufacturer of complete vehicles, including passenger cars. India is also a major exporter of automotive parts, components, and assembled vehicles to countries in the Middle East and Asia, which is expected to continue to be a major contributor to the Indian automotive industry’s revenue.

With the growing presence of international automobile manufacturers and brands in the country, and the consumers’ ability to purchase new cars and maintain those, the consumers have been willing to buy more than one passenger car to suit their daily needs and travel purposes.

Furthermore, with the growing focus on improved fuel economy and reduced exhaust emissions, the demand for and sales of electric vehicles, especially electric cars, are expected to witness fast growth during the forecast period. However, inadequate charging infrastructure and the high cost of electric cars may create new challenges for players operating in the market.

Scope of the Report

A passenger car is a road motor vehicle, other than a moped or a motor cycle, intended for the carriage of passengers and designed to seat no more than nine persons (including the driver).

The Indian passenger car market covers the rising demand for passenger cars in the country, incentives offered by the government for adopting electric vehicles, emission regulations, developments in the used-car market, and OEM market shares. The market has been segmented by vehicle type and fuel type.

Based on the vehicle type, the market is segmented into Hatchback, Sedan, SUV, and MUV. Based on the fuel type, the market is segmented into petrol, diesel, and other fuel type. Market size and forecast have been done for each segment based on Value (USD billion).

Vehicle Type
Hatchback
Sedan
SUV and MUV
Fuel Type
Petrol
Diesel
Other Fuel Types

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Key Market Trends

Growing Auto Component Industry to Support Demand in the Market

India was the fourth largest car manufacturer in the world in 2019. Indian motor vehicle manufacturers produced 22.65 million motor vehicles in 2020-21 (Apr-Mar), a substantial decrease from 30.91 million units sold in 2018-19.

The major presence of automotive component manufacturers across the country will likely witness major market growth. The Indian automotive component industry is expected to witness healthy growth during the forecast period, owing to increasing domestic demand, rising exports, and the increasing flow of investments in the automotive components sector. Thus, it makes India a key automotive components sourcing hub.

With Tata, an Indian-origin automotive manufacturer owning the Jaguar and Land Rover companies, the company is being able to migrate important technology to the Indian market. Tata Nexon has become one of the safest cars in the market, with a 5-star Global NCAP safety rating. This has improved consumer confidence and, thus, sales of Tata Motors and has led the way for Tata Altroz and Harrier, inspiring the consumers to buy the vehicles.

The National Government budget also announced an increase of 15% in customs duties on select auto parts. While this move has been made in line with the Make in India initiative, it can mean a disadvantage to vehicles assembled in India (brought in as Completely Knocked Down units).

It is estimated that the increase in auto component duties is unexpected in such a revival period with the pandemic, which will increase the production cost, leading to higher costs for consumers.

Market Share of Passenger Cars in India

Shifting Focus Towards Safer Passenger Vehicles and Towards Electric Vehicles

Improved government regulations and policies, in coordination with various ministries and departments, are anticipated to speed up the process of electric vehicle adoption in India. For instance,

  • The Ministry of Power clarified that no license is required to operate EV charging stations in India. The reasoning for making it license-free is that the government considers EV charging stations as a service, not the sale of electricity.

With the increasing sales of electric vehicles in India, automakers are investing in developing new technologies and increasing their production capacities to accommodate the demand. For instance,

  • In February 2021, Hyundai announced that INR 1,000 crore would go toward developing new affordable EVs. The vehicle will be manufactured locally, and the company is already in talks with the local vendors for sourcing the components. Hyundai may also seek a strategic partnership with its sister brand, Kia, as the latter also has plans to add EVs to its portfolio in India. The company is also working on a mass-market, more affordable electric car for India that could debut in the next two years, i.e., by 2024.

The government has decided to take a critical role in supporting the creation of demand and acceptability of EVs, spurring collaborative R&D efforts, and enabling the required infrastructure to take its shape. The government has also decided to implement a robust EV demand-generating scheme, in terms of size and duration, to meet the objectives of bridging the gap in the acquisition price of EVs compared to the normal IC engine vehicles.

India Passenger Car Market Growth

Competitive Landscape

Maruti Suzuki led the Indian passenger car market in 2021 in the hatchback, sedan, SUV, and MUV segments. Mahindra registered the highest sales in SUVs, after Suzuki, whereas Hyundai led the hatchback and sedan segments, after Suzuki.

Hyundai, Mahindra & Mahindra, Honda, Toyota, and Ford India have added new passenger cars to their product line-up. Tata is set to dominate the Indian MPV and SUV market with their Harrier and re-introducing Safari based on Harrier's build platform. Tata Altroz has taken a fair share of the Hatchback sector market, gaining many buyers owing to Tata's build quality, safety, and reliability.

Further ongoing plant expansion, mergers, and acquisitions between the vehicle manufacturer are witnessing major market growth. For instance,

  • In December 2021, Hyundai Motor India Ltd invested about INR 4,000 crore as part of an ambitious plan to introduce half a dozen electric vehicles (EVs) in the country by 2028.
  • In July 2021, Maruti Suzuki expanded the country’s largest single-location automobile investment as it plans to pump in up to Rs 18,000 crore for new factory premises in Haryana, which may have a peak annual capacity of 10 lakh units.

Recent Developments

  • In February 2022, The new Kia Carens will be launched in India, essentially the three-row derivative of the popular Kia Seltos; the Carens are Kia’s fourth model for the Indian market and, in true Kia fashion, made available with a wide choice of engine, gearbox and trim levels.
  • In January 2022, MG Motor India officially announced launching an electric vehicle before the end of FY 2022-23, before March 2023. It will be priced between Rs 10 lakh and Rs 15 lakh and target the masses. This all-electric crossover will be based on a global platform customized for the Indian market. The company aims to localize some of the components for its new electric vehicle to meet the government’s guidelines for a product-linked incentive scheme.
  • In October 2021, Mahindra introduced its new awaited car, XUV 700, to the SUV segment. Booking for the SUV began from 7th October, XUV 700 received approx 65000 bookings in two weeks, the deliveries for petrol variant started from 30th October and delivery for diesel variant will start from last week of November 2021.
  • In June 2021, Hyundai launched its new car Alcazar in the SUV lineup with 4000 pre-launch bookings in India. The diesel variant is dominated by 55% compared to 45% bookings for petrol. Considering the seating capacity, the SUV has 60% bookings for 6-seater and 40% bookings for 7-seater.

Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Study Assumptions

    2. 1.2 Scope of the Study

  2. 2. RESEARCH METHODOLOGY

  3. 3. EXECUTIVE SUMMARY

  4. 4. MARKET DYNAMICS

    1. 4.1 Market Drivers

    2. 4.2 Market Restraints

    3. 4.3 Industry Attractiveness - Porter's Five Forces Analysis

      1. 4.3.1 Threat of New Entrants

      2. 4.3.2 Bargaining Power of Buyers/Consumers

      3. 4.3.3 Bargaining Power of Suppliers

      4. 4.3.4 Threat of Substitute Products

      5. 4.3.5 Intensity of Competitive Rivalry

  5. 5. MARKET SEGMENTATION (Market Size in Value - USD billion)

    1. 5.1 Vehicle Type

      1. 5.1.1 Hatchback

      2. 5.1.2 Sedan

      3. 5.1.3 SUV and MUV

    2. 5.2 Fuel Type

      1. 5.2.1 Petrol

      2. 5.2.2 Diesel

      3. 5.2.3 Other Fuel Types

  6. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Vendor Market Share

    2. 6.2 Company Profiles*

      1. 6.2.1 Mahindra & Mahindra Ltd

      2. 6.2.2 Tata Motors Ltd

      3. 6.2.3 Honda Cars India Ltd

      4. 6.2.4 Toyota Kirloskar Motor Pvt. Ltd

      5. 6.2.5 Volkswagen India Pvt. Ltd

      6. 6.2.6 Maruti Suzuki India Limited

      7. 6.2.7 Nissan Motor India Pvt. Ltd

      8. 6.2.8 Skoda Auto India Pvt. Ltd

      9. 6.2.9 Ford Motors India

      10. 6.2.10 Kia Motors Corporation

      11. 6.2.11 Hyundai Motor India Ltd

  7. 7. MARKET OPPORTUNITIES AND FUTURE TRENDS

**Subject to Availability

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Frequently Asked Questions

The India Passenger Car Market market is studied from 2018 - 2027.

The India Passenger Car Market is growing at a CAGR of 9% over the next 5 years.

The India Passenger Car Market is valued at 32 Billion USD in 2018.

The India Passenger Car Market is valued at 54 Billion USD in 2027.

Maruti Suzuki India Limited, Hyundai Motor India, Honda Motor Co. Ltd., Tata Motors, Mahindra & Mahindra Ltd. are the major companies operating in India Passenger Car Market .

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