How the Automobile Industry is Driving India’s Growth

Recently, the Auto Production Linked Incentive (PLI) conclave took place in Delhi, where the Heavy Industries Minister, Mahendra Nath Pandey, stated that India is currently the world’s fifth-largest economy and is on track to become the third-largest soon.

The estimation of a country’s economic status is often based on its GDP, and looking at GDP, we find that the automobile industry contributes 35% to India’s total GDP. Therefore, it can be said that when India becomes the world’s third-largest economy, the automobile industry will play a crucial role in this achievement.

However, let’s understand the current status of the automobile industry in India and what we can expect in the future.

What’s Happening?

Presently, India is the world’s third-largest automobile market. As per the estimates, in 2023, it witnessed a milestone with the sale of 4 million units of passenger vehicles, driven by increasing disposable incomes, attractive loan interest rates, and the introduction of new sport utility vehicles.

According to the Economic Times, Vinod Aggarwal, the President of the Society of Indian Automobile Manufacturers (SIAM), mentioned that there has been single-digit growth in passenger vehicles, commercial vehicles, and two-wheelers in 2023, while the three-wheelers segment has witnessed a good recovery. Additionally, various government schemes are supporting the auto industry.

Contribution of Electric Vehicles (EVs)

In 2023, the total sales of Electric Vehicles (EVs) reached 1.53 million, showing a 50% growth from the total sales of 1.02 million in 2022. The market share of EVs in the entire Indian automobile industry was only 1.75% in 2021, which has increased to 6.38% in 2023, indicating a growing preference for EVs among consumers over the past two years.

The Future of the Automobile Industry in India

According to the Economic Times, the commercial vehicles segment in India has witnessed a growth of 4.8% to 978,385 units, while the sales of two-wheelers have surpassed 17.07 million units, marking a 9% increase.

Furthermore, the EV-Ready India Dashboard, developed by the OMI Foundation to showcase EV sales and growth, predicts a 45.5% growth in the EV market from 2022 to 2030. The sales of electric two-wheelers were 6,90,550 units in 2022, with an expected increase to 1,39,36,691 units by 2030.

What’s in it for Investors?

Tata Motors has become the first company in both the four-wheeler and bus segments to meet the minimum eligibility criteria of the Domestic Value Addition (DVA). Ola Electric, in the two-wheeler segment, is the first company in the two-wheeler category to meet all DVA conditions.

Mahindra and Mahindra, Tata Motors, and Ola Electric have already obtained Domestic Value Addition (DVA) certificates from testing agencies for 22 types of Advanced Automotive Technologies (AAT) products.

Considering the rapid growth in the EV segment of the automobile industry, investors may want to track various companies related to EVs, including EV battery manufacturers and other related entities.

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The companies mentioned in the article are for information purposes only. This is not an investment advice.

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