The Future of India’s Passenger Vehicle Market

Publish Date : April, 2020

India remains the most attractive automobile market in some specific segment, with annual sales of more than 21 million vehicles. Our research report finds that there will be a robust demand for private cars to drive the market forward in FY 2022. The Indian passenger vehicle market is in vain especially among domestic sales where the market declined from 3.3 million units in FY 2019 to 2.7 million units in FY 2020 which is pretty equivalent to the FY 2016 volume.

Indian PV Market – Segment, Price and Top Models

Besides, production volume has also declined from 4.2 million units to 3.3 million units; however, the exports of PV grew from 6,76,192 units in FY 2019 to 6,77,311 units in FY 2020.

The CAGR of the SUV/MUV segment is around 13% considering FY 2012 and FY 2020. Meanwhile, the car segment showed -2% CAGR, Van -7% and PV segment recorded a 1% CAGR.

Since there has been a sluggish growth (economically) back in 2019, the COVID 19 has an immense impact on India. The domestic passenger vehicle market declined in FY 2020 after it grew from FY 2014 to FY 2019.

Indian Passenger Vehicle Market Trend and Forecast

The upcoming years are presumed to be hard for the Indian automotive sector; however, the possibility for growth remains strong, and eventually, the future of the Indian Automotive sector will get back to normality in FY 2022. Though the COVID 19’s impact on production is temporary, demands improved the perception of both existing and prospective car owners. After all, Indian remains the world’s highest growing country when it comes to the GDP and Automotive market.

Indian Car Product Position and map with income Group:

Indian Car Key Model Grid Analysis

Luxury Car Market in India and Forecast:

The combined sales of BMW, Mercedes Benz, JLR, Audi, Volvo Car, Porsche, Bentley, Lamborghini, Mitsubishi Motors, Ferrari, Lexus was 35,000 units in FY 2020. Audi and Mercedes Benz lost 9 and 8 percent market share in the last 5 years. Jaguar Land Rover (JLR) gained 6 percent market share in FY 2020. Volvo car sales increased 20 times in the last 5 years. Porsche, Ferrari sales are stagnant from 2016. Lamborghini sales more than doubled from 2016 volume. Mitsubishi lost its grip in the luxury car market.

Luxury car Market in India and Forecast

There will be strong demand from existing car owners for new and used vehicles in FY2022. After COVID 19 pandemic, it is highly expected that personal vehicles will be in great demand compared to rideshare services. Since the thought of getting corona itself puts one in agony.

In a nutshell, the small and medium-sized automakers, dealers, and suppliers from India will face unusual and probably extreme challenges in creating sales strategies, managing product portfolios, and ensuring they are in a position to capitalize after COVID 19 impact.

Passenger Vehicle Market Share and Customer need:

Maruti and Hyundai are the leading OEMs in the car and SUV segments. In our report, we have mapped the Market share relation with customer needs, product price, Brand position, Product features, and other key dynamics.

Based on the last 10 years’ performance, Renault, Isuzu, Honda, Nissan, and Hyundai registered the highest CAGR.

Indian Passenger Vehicle Market Share Analysis

The competition is intensifying among Mid SUVs, compact, and mid-sized car segments. However, in every car segment, there is a minimum of two OEMs holding a 50% segment share in FY 2020 irrespective of any sub-segment.

Competitor analysis of Indian Passenger Vehicle Market

It’s expected that the percentage of first-time car buyers will be declining in FY 2021. Hence, automakers must create a blueprint that will attract the buyer’s attention; specifically, the lower and upper-middle-class buyers, who shall restore the market’s normalcy.

To engage OEMs with existing and potential buyers, new brand ideas must be served.

The Key factor of segment shift is the arrival of new OEMs and the establishment of various new models. In FY 2011, a maximum new entrant and new models were launched to capture market share in the Indian PV Industry. It was the time when the market began to grow after FY 2008 recession. The customer sensibilities were eventually high, and thus, they were looking for new brands and models. However, the SUV/MUV is the only sub-segment which registered a steep growth in FY 2020 compared to FY 2019.

India’s car ownership per thousand people remain relatively low but the potential for car sales is strong. However, the ability to attract prospective customers is critical for OEMs at this stage. The study also estimates the market size of the Indian PV market along with Challenges, Opportunities, and Growth Analysis and segment forecasts up to FY2025.

India’s passenger car market is mainly driven by product features, Operating costs, and price. Brand loyalty comes in third place in the buying process. Two brands Maruti and Hyundai take more than 60% market share from FY 2015 in the Car segment.

In FY 2020, after 8 years of rapid expansion, India’s passenger vehicle market’s sales declined for the first time, but despite degrowth, several new models like Seltos, Hector, Triber received a good response. SUVs remain the most popular vehicle choice.

Following COVID 19 pandemic, it is expected that used cars will be in demand due to the limited purchasing power of the middle class.

Car Customer segment Analysis

The SUV segment under the price range of 15 lakhs which is the fastest-growing category registered 25% CAGR from FY 2012 to FY 2020 and increased its segment share from 5% to 27% in the last 9 years. Kia’s Seltos and MG Motor’s Hector have launched its two different sub-segments of SUV.

New car and SUV model launches product strategy and impact analysis

Many existing models are still dominating their presence in specific sub-segment like Swift, i20, etc. Our detailed analysis of the Product life cycle and new launches reveal how it plays a significant role in supporting the market share.

Product Life Cycle and Sales Strategy:

Indian Car Product Life cycle and Sales Strategy Analysis

We have analyzed each product’s life cycle of every model and mapped it with sales, customer response. As a result, we observed a shift among sub-segment patterns. In a Compact car, the sub-segment share increased 14%, while on the other hand, Super compact cars recorded -28% CAGR during FY 2012 and FY 2020.

The largest sector in the Indian automotive market appeared to be the compact car segment. Hyundai and Maruti are two major OEMs of the segment. Maruti Suzuki is the market leader of the segment adding 33% market share in the last 9 years.

However, Hyundai and Tata Motors lost their 1% and 14% market share in FY 2020. While in FY 2012, there were 14 OEMs present in this segment but in FY 2020 only 9 players survived.

The combined market share of mid Sized car segments like Maruti, Hyundai, and Honda reached around 79% in FY 2020. The individual details include – Maruti Suzuki increased its market share from 9% to 30%, Honda 18% to 25%, whilst Hyundai lost 1% of its market share during FY 2012 and FY 2020.

Purchase pattern: The report analyzed 3 customer segments – first-time buyers, second are those who upgrade their cars and third are those who preferred used cars.  We also considered the buyers’ segment, based on age and income level – Lower Middle class, higher middle class, and rich class. And the result implied that the middle-class people were the largest buyer segment in India like China. In the last 8 months, the purchasing power of consumers shriveled due to high inflation.

Indian Car customer buying process

As per our survey, Indian consumers consider only three to four brands, depending on the type of vehicle in their mind when they plan to buy a new car. It is also observed that around 15% of consumers switched their decision after being convinced by a salesperson in the car dealership. It is easy for a dealership to change the mindset of the first time buyers compared to that of second and third time buyers. Existing car owners tend to buy a sports utility vehicle (SUV) when it comes to purchasing an additional car.

Brand image perception and brand relevance study:

The report defines brand perception and its influence on buying a vehicle. We carried out secondary research with sample size embracing 1,000 customers from different cities and towns. OEM’s detailed strategy analysis is part of the report as well.

Variant wise Indian Passenger Vehicle Assessment:

In India, there are more than 900 variants available to consumers. The sedan is having maximum variants following by Hatchback and SUV.

In Fuel type, 52% variants are Diesel type, 47% Petrol type, and just 1% variants are available in CNG.

Tata Motors, Hyundai, and Maruti combined product variants share is 44% in FY 2020.

Key highlights of the Report:

  • Indian PV market overview and Highlights
  • Indian PV Market size in volume and value
  • Car, SUV, and MUV market Trend and Forecast
  • Segment Analysis – Hatchback, Sedan, SUV, Small Car, Premium, Budget, low cost, Sport, Premium, Luxury, Compact, MUV, Van
  • Monthly Sales Trend
  • Segment Analysis and Definition
  • Key Models of each sub-segment – Price, Specs, Features, Customer segment, PLC, and Product USP
  • Product life cycle Analysis and Sales Strategy
  • New Product launches and impact
  • Growth Opportunities in the Indian PV market
  • Product portfolio – Segment and OEM wise
  • OEM performance analysis on 5 different parameters
  • New Technology Introduction
  • Customer segment analysis based on Incomes, Age, and profession
  • Advertising Strategy and Marketing communication
  • Customer mapping analysis
  • Gen-Z Population and Millennials
  • New Regulation
  • Pricing Strategy after the BS-VI norms
  • Chinese OEM entry Strategy Analysis
  • Macro-Economic indicators Analysis – GDP growth, IIP, Inflation, and fuel price
  • Ranking in Doing Business in India
  • SWOT and PESTEL Analysis
  • Powertrain Analysis – Engine and Transmission Trend
  • Safety norms
  • Connected Car technology, cost impact, and Customer acceptance
  • Shared Mobility Trend – Future Market Trend, Market drivers, Business Model, OEM sales strategy and shared service providers, Market share, their fleet size
  • Electric Car Market Analysis and Forecast
  • Electric Car Product offering and acceptance, Business Strategy, Entry Strategy
  • FAME II and Statewise Electric vehicle Policies
  • PV Market Challenges
  • Indian Taxi market size, key players, and Product portfolio
  • Car and SUV Variants level market analysis
  • Conclusion

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