India’s annual automobile manufacturing capacity in the financial year (FY) 2021 stood at 22.65 million vehicles, including passenger vehicles, commercial vehicles, three wheelers, two wheelers, and quadricycles, of which 4.13 million accounted for exports.
Industry estimates project the market size of the Indian automobile sector to reach US$300 billion by 2026, registering a significant growth from the existing US$118 billion in 2020.
Additionally, the automotive sector contributes 7.1 percent to India’s gross domestic product (GDP) and employs a workforce of 37 million. The Automotive Mission Plan 2016-26 (AMP) envisages to raise the sector’s share in GDP to 12 percent and create employment opportunities for over 65 million people.
Major vehicle market players
Some of the leading players in India’s automobile industry are Tata Motors, Maruti Suzuki, Mahindra and Mahindra, etc. Leading foreign players, including Kia Motors and Volkswagen, have customized their products in terms of traditional structure and designs to cater to the large Indian middle-class population. This is essential for them to compete directly with domestic firms as the sector is highly competitive.
Annual production of automobiles in India show a compound annual growth rate (CAGR) of 2.36 percent. From an annual production capacity of 24.02 million in FY 2016, the production capacity peaked in FY 2019 with 30.92 million units. However, the industry has since been hit by the COVID pandemic-led slowdown, with annual production falling to 22.65 million in FY 2021. In June 2021, the automobile production in India, comprising of passenger vehicles, three wheelers, two wheelers, and quadricycles stood at 1,693,639 units.
Simultaneously, a similar analysis of domestic annual sales of automobiles in India shows a CAGR of 1.29 percent. While the annual sales figures stood at 20.47 million in FY 2016, they peaked in FY 2019 at 26.27 before slumping to 18.61 million in FY 2021. However, the industry estimates look promising as the first quarter (Q1) of FY 2021-22 witnessed a 113 percent growth in the total domestic sales of vehicles. In June 2021, sales volume of passenger vehicles in India stood at 231,633 units.
