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Indian automobile sector created a value of $108 billion or Rs 8.7 trillion in the financial year 2022-23 (FY23), according to a report by management consultancy firm Primus Partners (PP).
The report highlights the contribution of the automobile sector to the manufacturing sector in particular and the overall economy. It adds that it employs 19 million of the total 62.4 million people working in the manufacturing sector in the country.
Touching on the ongoing shift to electric mobility in the automobile industry, the report talks about the challenges, like the lack of charging infrastructure, while highlighting the government initiatives to support the transition towards electric mobility.
Outlook for the Indian automobile sector
India is the world's largest two-wheeler and third-largest passenger vehicle (PV) market. PVs add Rs 5 trillion to the automobile sector, with more than half of this coming from the sales of mid and full-size SUVs.
While the penetration of electric vehicles (EV) has increased in recent years, the report highlighted that it is still not at par with many developed countries. According to the report, expensive electric vehicles, range anxiety, and limited charging infrastructure continue to be the biggest impediments to EV adoption.
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However, empowered with the government policy and a realisation by the industry, many EV manufacturing units are being set up across the country, which can help India catch up with the leading countries, the report added.
Which vehicles make the most money for the sector, and which ones sell the most?
While it may be an easy guess that two-wheeler vehicles make the bulk of sales in terms of the number of vehicles sold at 77 per cent, it is interesting to note that two-wheelers account for only 21 per cent of the value for the sector.
On the other hand, passenger vehicles make the most money for the automobile industry, accounting for 58 per cent of the total value of the automobile sector. Interestingly, in terms of units sold, passenger vehicles are only 16 per cent of the total vehicles sold in the country. Passenger vehicles sold in the financial year 2022-23 were valued at $63 billion, the PP report said.
Source: Primus Partners
Commercial vehicles accounted for 4 per cent of total vehicles sold in the country but were 19 per cent in terms of value. A total of 103,6000 commercial vehicles were sold in FY23.
More than 850,000 three-vehicles were sold in the country valued at Rs 17,000 crore, accounting for 3 per cent of the volume and 2 per cent of value.
Here is how different segments stack up
Source: Primus Partners
Mini segment
With an average price of Rs 4.9 lakh, the mini sub-segment has cars like Alto 800 and Kwid RXE 1.0. This category is characterised by budget-friendly price tags. The segment accounted for 7 per cent of the total car sales.
Compact segment
The compact sub-segment with cars like Baleno, Aura, Altroz, and Amaze is the go-to segment for most first-time car buyers in the country. With an average price tag of Rs 7.7 lakh, this category sold 1.61 million vehicles in FY23, adding Rs 1.24 trillion to the passenger car sales, making it the most important segment of the industry, the report said.
Sedans
Once the most popular body design in cars, Sedans have seen a consistent fall in sales as the preference for SUVs has grown in the country. FY23 sales figures further bolstered this trend as the market share of sedans slipped from 20 per cent in 2011 to just 6 per cent in 2023. With an average price tag of Rs 13.7 lakh, sedans accounted for 7 per cent of the passenger cars in value.
SUVs and MUVs
The compact or mid-size SUV segment has been the fastest-growing segment in the country, and SUVs have further strengthened their hold in the passenger car market. With a market share of just 10 per cent in 2013, it reached 38 per cent in 2023. The average price of vehicles in this category is Rs 11.9 lakh. SUVs and MUVs account for 38 per cent of sales of passenger cars.
Full-size SUVs
With an average price tag of Rs 17.7 lakh, full-size SUVs contributed Rs 68,000 crore to the automobile industry representing 13 per cent in terms of value, accounting for 9 per cent of units.
Luxury cars
Expensive vehicles like Toyota Fortuner, Mercedes, BMW, Audi and other similar brands were counted in this category, and their average price tag stood at Rs 39.4 lakh, the PP report said. Despite its low market share of 3 per cent, the segment contributed Rs 63,000 crore to the industry, thanks to the high per-unit cost.
