Although the Indian auto sector is facing growth challenges, it has potential to grow at a CAGR of 5 per cent through 2026, said automotive business intelligence company JATO Dynamics.
The new entrants will account for almost 15 per cent of the market or little over half a million units, it said here in its report at Auto Expo here.
"We expect the Indian industry to grow at a CAGR of 5 per cent through 2026. The new entrants will account for almost 15 per cent of the market, or little over half a million units," it said.
"The passenger car sales growth will be driven by new model introductions in the SUV and hatchbacks segment," it said.
The SUV segment currently accounts for 26 per cent of total car sales in India.
"The arrival of small, cheaper and more modern SUVs is boosting this segment, volumes of SUVs under 4 metres grew by 8 per cent to 421,488 units," it said.
The mini hatch or entry segment has been witnessing a decline as consumers are looking at feature equipped cars, bigger size premium hatchbacks and this has resulted in the decline of mini hatch or entry segment.
"The Indian light vehicle market is expected to grow at a compounded annual rate of 5 per cent through 2026," said JATO Dynamics India President Ravi Bhatia.
He further added: "The market size will grow from 3.4 million units in 2019 to 4.8 million by that time."
The Light vehicle sales crossed the 3.4 million mark in 2019.
India is the fifth largest automobile market, behind Germany in 4th position and Japan in 3rd.
"Since 2019 we have seen a fresh wave of new OEMs entering India or announcing their entry plans and we expect to see some of these at the Auto Expo 2020. This indicates the attractiveness of Indian market and its growth potential," he added.