In 2019, India overtook Germany to become the fourth-largest auto market with sales of about 3.99 million passenger and commercial vehicles. By 2025, India will displace Japan to become the third largest.
Government-sponsored initiatives like Make in India ushered in new levels of growth. The reduction in GST has spurred the development and innovation in electric.
Due to the push in investments from auto component markets, India’s automobile segment is at the cusp of technological revolution and is focused on complying with future ambitions and demands.
How Will Technology Take the Front Seat?
The first wave of change is already underway. Let us look at the technology trends that will change mobility behavior, generate a shift in the market, and build new avenues for competition and cooperation.
Electric and alternate-engine powertrain
Based on a recent survey, 35% of buyers are willing to pay a premium of more than INR 1 lakh for an EV. Declining prices of batteries and supportive government policies are stimulating growth.
During FY17-20, electric vehicles recorded a growth rate of 44%. There is an increased preference for EVs due to reduced GST and government support policies. Even the alternate-engine powertrain segment is contributing to the growth.
Telematics and connected vehicles
Connectivity is still nascent, but a minuscule share of vehicles sold in India is pre-fitted with connectivity features. The growing internet, low data cost, and smart device adoption could proliferate vehicle connectivity.
Research into advanced telematics utilizes car sensor data, vehicle health parameters, driver/passenger health, and behavior. Auto startups are leveraging the data coupled with proprietary hardware and algorithms to build safety and security solutions and predict vehicle maintenance and repairs.
Autonomous vehicles with AI and ML
India sees 12% of global road fatalities. More than 80% of accidents involve driver error. With the clogging up of roads, autonomous (both land and aerial) vehicles offer a solution to India’s road safety and fuel efficiency challenges.
AI/ML will automate vehicular functions and play a pivotal role in connectivity that turns vehicles into a connected alarm mechanism that informs the driver of obstacles. It will send data like the engine’s status and temperature in real-time.
Recently, the Govt. of India made it mandatory to install Advanced Driver Assistance System (ADAS) in all the new vehicles to be sold from 2022 to promote the adoption of autonomous vehicles.
With IoT-enabled technologies, vehicles can access real-time data and present a comprehensive analysis to drivers and vehicle owners. IoT and vehicle connectivity can share information between vehicles like traffic congestions.
During emergencies, it can send a SOS to concerned departments. Vehicles can supply relevant data and information to save time and drive better.
India’s Value Proposition
What value can India bring?
Center for frugal innovation
India learned to get more value from limited resources and find creative ways to reuse what they have. India has been a hub for frugal innovation and engineering. Carmakers can develop products costing a fraction but offer enough value to attract demand.
Carmakers must embed software in their vehicles to manage complex hardware systems such as sensors, processors, and storage devices. Many Indian IT and auto component players are developing embedded software to gain the first-mover advantage.
Bengaluru-based Sasken Technologies is applying embedded software in products of more than 100 Fortune-500 companies. It recently tested a framework for vehicle telematics in collaboration with a North American Tier-1 supplier.
Low-cost and high-quality talent
India is known as the hub for low-cost talent for years. Multinationals have recognized the country for high-quality managerial talent who occupy significant positions and leverage local talent to drive innovation in their R&D centers.
For instance, an auto manufacturer is creating products with a local team of engineers and managers to drive growth in the long run.
Win in India, win anywhere
India is an archetype market for emerging economies comparable to Southeast Asia, Africa, and South America. Despite the difference in population scale, all these regions present similar challenges and opportunities as India, like a burgeoning middle class, value-focused preferences, and an evolving manufacturing ecosystem.
Companies that developed products in India for India found markets in other developing markets. Case in point, the subsidiary of the American auto giant, Ford India, is exporting over 90,000 EcoSport cars annually, twice the amount of their domestic sales. Similarly, Hyundai and Volkswagen use their Indian facilities as a global hub for R&D and manufacturing of their compact hatch and sedans.
Prevailing in India
As various Indian and foreign companies are expanding their market in India, companies need strategies that could give them an edge.
- As disruptions are around the corner, automakers must reinvent their business, adopt lean operations, bundle new products with innovative solutions and services, and explore opportunities that create additional value-chain.
- Various industries are cooperating and partnering to build relevant assets. As the high-tech and automotive worlds merge, auto startups are mushrooming and attracting investments from large companies. These established companies must adjust their operating model and work with startups and non-traditional companies.
- These companies must develop a time-driven strategy to embrace digitization, connectivity, and big data analytics. They must appoint a team to build and manage technology integration.
- Auto companies should empower their teams in India, invest in talent, and prepare a team of leaders and provide them autonomy.
- As Indian consumers climb up the income ladder, their definition of value changes, driving up demand for quality and features while keeping prices low. Additionally, a large share of the demand will come from rural and metropolitan areas. Companies must identify which pockets to focus on and then invest in appropriate products.
India’s automotive industry is overcoming its COVID-19 slump and focusing on the 2020s as the decade for recovery, transition, and expansion. Hence, the incumbents must build an outlook on the Indian auto sector, which sees disruptions across digital technologies, power trains, customer preferences, and regulations.
Draup leverages data from 8,000+ sources and its custom machine learning models to extract actionable insights about key players in the automotive industry based on current organizational requirements. Sales teams can use the insights to fulfill their needs.
Download the report to read our findings and gain a comprehensive view of the Indian auto sector.