My first blog on Indian Automotive industry: Opportunities & Challenges

Hello friends, at last after lots of thinking and following many online blogs I have decided to start writing my own blog. First of all, let me introduce myself to you all: I am Vinayak, I have master degree in Automotive and 10+ years in automotive industry, an auto enthusiast from collage day likes most of you, traveler, food lover and now a blogger as well.

Blogging is now days became very convenient way to express your feelings and share knowledge to all who needs them. If you just search around internet you will get thousands of blogs on almost all the topics under the sun. However, you need to be cautious while using data available on blogs (due to authenticity), but surely it gives you direction in which you can search required thing. So with intention of sharing interesting info & fact, I started this blog specifically on automotive field. I am planning to write blogs on latest happening in Indian Automotive field, its current challenges & opportunities, government rules & regulations, rise of electric cars, also collated reviews of new launch cars from various reputed sites like Autocar, Overdrive etc.
(This is just tentative plan, based on feedback topic can be chosen)

My first blog is focused on Indian Automotive industry; i.e. size of industry, some interesting facts, role of auto industry in Indian economy, current challenges and opportunities etc.

We all are fascinated by speeding cars or bikes, but automotive industry is much more than just being glamorous industry. In fact, in India Automotive industry is one of most revenue & employment generating industry with annual turnover of $100 billion and employs 32 million people.

v How big Indian auto industry is in comparison to global scenario ??

 From below chart you can get idea how big automotive industry compared to global market 

v Contribution of Automotive industry in Indian economy:

Below are some of the important facts & figures which highlights why Auto industry is key contributor in Indian economy

• It contributes 50% manufacturing gross domestic product in India, 26 % of industry GDP & 7.1 % of overall GDP (which was 2.7% in 1992-93)
• The sector attracted $24.2 bn FDI during April 2000- March 2020; accounting for 5.1% of total FDI inflows.
• It has approximately produced about 32 mn employments.

v  Key enablers that will spur Auto industries growth in India:

Below are some of the factors which will spur growth of auto industry in upcoming decades,

1. Increase in Urbanization & per capita Income : According one estimation, India will have 500 million people living in cities by 2030; this is about 1.5 time’s entire population of US. Along-with this, it is estimated that there will be increase in per capita income , more % of young people working which will increase demand for mobility.
2. Government focus on supporting the industry: Currently, the automotive sector contributes more than 7 percent to India’s GDP. The Automotive Mission Plan 2016–26 sets an aspiration to increase the contribution to 12 percent. Apart from that there are many initiatives like National Electric Mobility Mission Plan (NEMMP), shift in emission norms etc which are also set to have long-term growth in the industry and reduce emissions , oil dependence etc.
3. The development of India as a manufacturing hub:  From many years India have been manufacturing hubs for many global auto industries. Global companies like VW, GM, Hyundai exports more than double what they sell in India. The World Economic Forum ranks India 30th on the global manufacturing index, which assesses the manufacturing capabilities of more than 100 countries. Adding to this the government’s “Make in India” initiative helping improving this situation.
4. The potential for global disruptions:  Currently global automotive industry is undergoing series of disruption that is changing it in many ways and Indian auto industry will be no exception to this. Four key trends that will cause disruption are rise of electric mobility, shared mobility and autonomous & connected vehicles & most important up gradation of legislation norms.

vCurrent challenges of automotive industry: 

You might have read news last year that auto industry is going through very bad phase in many decades; it is result of many factors put together. Like all other industries, Covid-19 has further worsened this situation. There are some sign of market recovery in last couple of months still overall there are some challenges in front of Auto industry as below:

1.Dynamic regulatory changes: 

Automotive industry is one of most regulated industry in India and in world as well. Regulations controls way OEM’s design & manufactures vehicles. Even though change in regulations is necessary, planned thing and it had happened in past as well but the pace at which these changes are happening , is questioned by many industry experts.
Some of the changes explained as below,

• BSIV emission norms implemented in pan India from April 2017 & India skipped BSV norms and immediately switched to BSVI emission norms . Even though its good for environment and its must for some of the metro cities like Delhi, but transition from BSIV to BSVI in span of 3 years had put auto industry in enormous pressure. Since lots of development cost needed for same. Similar transition happened in Europe (i.e. euro iv to euro vi) it took almost ten years. (But still most of auto companies in India managed successfully this herculaneum task, we will discuss in detail in my next blog on emission norm.
• Additionally, India has implemented Corporate Average Fuel Efficiency norms in which the manufacturers have to improve their fuel efficiency by 10 percent between 2017 and 2021 and by 30 percent or more from 2022.
• Formulation of end-of-life or scrap page policies.
• Other norms like changes in safety norms, increase in payload norms in cv segment etc. also challenge in front of industry.

2. Electric mobility: This has been talking point in auto industry. Like many other European countries, Indian government also earlier announced to migrate completely from IC engine to electric vehicles by 2030. Even though electric vehicles have lots of good thing to offer still there is big question in front of industry that whether infrastructure, supplier ecology & most importantly customers are ready to accept this changes.This puts up dilemma in auto industry to which Powertrain Technology needs to be chosen, since Indian Auto industry is fairly matured in terms of IC engine technology but for electric mobility they need to invest heavily.So auto industry needs clear road map on future legislations.

3. Technological disruptions: With entry of many global OEM’s & customer being more tech savvy these days, vehicle needs to more & more provided with tech gadgets.If you compare cars from 2000’s to 2020, there is huge increase in % of electronics items in cars. So in order to make product more competitive and tech savvy, OEM have to invest on these technologies. Some of the technologies such as connected vehicles, real time vehicle tracking, geo fencing, driver analysis and remote diagnostics etc.

4. Rise of shared mobility : Due to rise of urbanization many issues like increased congestion, lack of parking space etc are concern in front customers. 

As per survey many customer prefers shared services like Ola, Uber etc. options. Some of the OEM’s already recognised impact of this factor and collaborated with service providers such as M& M collaboration with Ola in Nagpur etc. 
However some of the reports suggest that , this might change post covid as people might prefer personal cars than public transport. Sales figures of most of the OEM'S for oct.2020 shows early indication of same.

5. Globally interconnected industry: Due entry of many global OEM’s like Kia Motors, MG & other global OEM’s like Hyundai, Suzuki etc. there is fierce competition in passenger segment .
If you look at recent sells figure, only 2 major players i.e. Maruti-Suzuki & Hyundai comprises @ 70% of market share, while all other OEM (about 10) have to manage in 30%. This is also true for commercial segment with global OEM’s like dalmaier, Benz Volvo etc.This global OEM comes with state of art technology, lots of variants and proven products. Hence Indian automotive companies have to work hard to impress customers.

6. Evolving customer expectations: Due to rise of IT & exposure to internet, customers are very peculiar while choosing products. They compare lots of options before selecting final one, also due availability of online reviews comparison product have to be up to the mark in comparison with competitions. Hence product planning need to take not just current competitors but also future competition (considering 4 years development plan for vehicle).

So over all to conclude things, even though there are many challenges in front of Indian Auto industry there is huge potential to grow in future. There are early signs of recovery in couple of months hope to improve with festive season coming.

So this is it, Hope you find this blog useful and interesting stay tuned for some of the future blogs on topics of automotive.
Please comments for your feedback and suggestion.

Thanks You All !!!

(Please note many facts and figures are from many standard reports and online site, if you wants details of it please comment accordingly details can be shared)