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India Targets 50% EV Sales by 2030 for Net Zero Emission by 2070
Autos, Business, Equities, Markets - January 21, 2025

India Targets 50% EV Sales by 2030 for Net Zero Emission by 2070

India Targets 50% EV Sales by 2030 for Net Zero Emission by 2070

India has a set goal of achieving a net zero emission target for the year 2070. In order to achieve this goal, India has to complete Electric vehicles sales growth of 50 percent by the year 2030. On 20th January, 2024, Environment Minister of India, Bhupender Yadav made this announcement in the third International Conference on Sustainable Circularity held by Society of Indian Automobile Manufacturers (SIAM). He further stated that India has achieved a capacity to sell cars per annum more compared to the size of population of few countries. Along with this milestone, great responsibility of conserving the environment comes.

Need to hike EV sales
The Environment Minister of India states that India is recording a hike in sales of vehicles which is a good sign. The auto industry and government must work together to make sure that this hike will not harm the environment.

Electric vehicles sales are anticipated to hit the record of close to 35 percent in the year 2030. However, to make sure the automobile industry achieves the target of net zero emission by the year 2070, the sales needs to increase by 50 percent.

The hike in EV sales will not only help climate conservation but will also promote job creation. The number of sales in the Electric vehicles segment is expected to record around 10 million units by the completion of the year 2030. It will help to create employment of about 5 million.

Electric Vehicles also play a major role in reduction of CO2 emissions. These vehicles are quite sustainable for the earth. It does not release pollution in the environment. It requires batteries to work and these batteries are charged using electricity.

By the end of the year 2030, electric vehicles in India are expected to reduce CO2 emission to about 5 metric tonnes. This cutting of CO2 emissions can reach a range of 110 to 380 metric tonnes by the end of the year 2050.

Participation in GCP
Minister encouraged companies in the automobile industry to voluntarily contribute towards the environment by engaging in the Green Credit Programme (GCP) of India. By becoming part of GCP, it will give automakers rewards for their steps taken towards environment conservation.

Promote Circularity Practice
The circularity practice refers to reuse of components as well as depletion of waste formed while producing a commodity. The environment minister states that India could raise about 624 billion US dollars every year by the end of the year 2050, in case of implementation of circular practices in the manufacturing activity of the country.

The Society of Indian Automobile Manufacturers (SIAM) must encourage the practice of circularity in the manufacturing of vehicles in India. It should also make consumers aware of the significance of such practices.

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Solid reason for GST reduction on two-wheelers

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Tata Motors to operate hydrogen internal combustion engine trucks
Business, Equities, Markets - January 21, 2025

Tata Motors to operate hydrogen internal combustion engine trucks

Tata Motors to operate hydrogen internal combustion engine trucks

Overview
As the company advances a range of technologies to promote sustainable mobility, Tata Motors will continue to invest about Rs 2,000 crore a year in the creation of new commercial vehicles and capital equipment, said Executive Director Girish Wagh. The company’s commercial vehicle (CV) branch is developing a range of technologies, including hydrogen internal combustion engines, fuel cell electric vehicles, zero-emission battery electric vehicles, and alternative fuel.

Tata Motors to operate hydrogen internal combustion engine-powered trucks
Tata Motors is set to begin using hydrogen internal combustion engine-powered trucks on a test basis in the March quarter. The business and IOCL will operate the vehicles on three routes for 18 months as part of the National Green Hydrogen Mission pilot project. The corporation is developing every technology, including battery electric and even zero-emission alternatives like alternative fuel. The company is also focusing on electric fuel cells. Wagh told PTI on the sidelines of the Auto Expo, which is a part of the Bharat Mobility Global Expo 2025, that the company is also working on H2 ICE (hydrogen internal combustion engine).

The vehicle with a hydrogen internal combustion engine was unveiled by Tata Motors last week at the Bharat Mobility Global Expo 2025. According to Girish Wagh, executive director of Tata Motors, the company is preparing for both fuel-cell electric vehicles and hydrogen internal combustion engines. According to him, the vehicles equipped with internal combustion engines that run on hydrogen would begin operations this quarter. Three routes will be served: Mumbai-Pune, Mumbai-Ahmedabad, and Jamshedpur-Kalinganagar. Wagh told PTI that the pilot project will produce a lot of data that will be used to enhance both the product and the infrastructure for hydrogen fueling.

He gave a speech on Friday in the nation’s capital during the Bharat Mobility Global Expo 2025. Wagh stated that there is a lot of work being done throughout the value chain regarding the use of hydrogen as fuel and that the company already has 15 electric fuel cell buses operating with IOCL for more than ten months. Wagh added that the company is anticipating some assistance as it prepares for the commercial launch of hydrogen-fueled vehicles in 12 to 24 months.

Tata Motors’ Budget Expectations
In order to improve its value offer, Tata Motors Commercial Vehicles is redefining itself. Wagh went on to emphasize that radical change is taking place on the foundation of safety, sustainability, and artificial and digital intelligence. According to Wagh, the market for commercial vehicles has been more volatile this fiscal year. Furthermore, the business is seeing growth in every end-use sector. Consequently, we anticipate that the fourth quarter will be a successful one.

Regarding what to expect from the next Union Budget, Wagh stated that the government has been highly supportive of the transition to sustainability and electrification. According to him, there have been numerous interventions throughout the year, including FAME incentives and PLIs, in addition to the budget.

Tata Motors to continue to spend on capital equipment
The company showcased a variety of CVs at the expo that were based on different fuel technologies, including flex fuel, battery electric, ethanol, biodiesel, CNG, LNG, diesel, and H2 ICE.

When asked how much money the company would invest in developing new products, Wagh replied that it would continue to spend about Rs 2,000 crore a year on capital equipment and products, and that it would remain competitive in that area. He went on to say that up to 40% of that money is actually being spent on all of these new technologies, including connected car platforms, ADAS (advanced driver-assistance systems), and electrification. Wagh gave an explanation of why the corporation is investing in a range of technologies, stating that battery electric vehicles will be more lightweight and suitable for a specific type of route within a city or city to semi-urban area.

According to Wagh, a hydrogen-type technology is required for heavier duty and longer distances, and that’s what it looks like right now. As a result, the business is developing all of these technologies. Furthermore, he stated that Tata Motors has been working on all alternative fuels, which is where the shift would take place, because the transition (zero emission) will not come instantly. As a result, the business has made technological investments that will meet all of these needs. Tata Motors displayed 14 CVs with ADAS capabilities at the current expo. Among other things, it displayed the next-generation hydrogen-powered Prima Truck and the intra EV, an electric pickup. Further as stated by Wagh, Tata Motors has repositioned its brand for its resumes in order to better reflect India’s shifting demographics and people’s goals.

Conclusion
In addition to improving the infrastructure and vehicles, the pilot project supports Tata Motors’ repositioning for increased value in the commercial vehicle market. The company is hopeful about the industry’s future despite the fiscal year’s many obstacles, especially anticipating a robust fourth-quarter performance.

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Solid reason for GST reduction on two-wheelers

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Indian Government prepares to make ecosystem for premium Electric Vehicles
Autos, Business, Equities, Markets - January 20, 2025

Indian Government prepares to make ecosystem for premium Electric Vehicles

Indian Government prepares to make ecosystem for premium Electric Vehicles

The government of India wants to develop an EV ecosystem for premium Electric Vehicles. Last year, the Indian government encouraged investment in manufacturing of premium EVs at the local level through the scheme known as Scheme for Manufacturing Electric Car (SMEC). The SMEC was announced on 15th March, 2024.

To support this goal, the government wants to invest in research and development (R&D). It also wants to provide funds for establishment of separate specialized production lines particularly for EVs in the midst of existing factories. It helps to streamline production of EVs and also does not disturb production of other vehicles. The official guidelines regarding the schemes will be announced soon.

About the SMEC scheme
The main goal of the scheme was to uplift the investment in production of premium Electric cars at local level. It is to promote manufacturing at the local level. The scheme gives import relaxation of about 15 percent for a duration of 5 years. The automakers can import EV vehicles of minimum worth, freight cost and insurance of $ 35,000 with benefit of this reduced import duty. However, the automakers have to make an investment of at least 500 million dollars to establish local production of EVs in order to obtain this benefit of import duty relaxation to 15 percent.

Discussion with Auto Industry stakeholders
This resolution of focus on R&D and separate production lines for EVs was taken after the meeting with auto industry shareholders in the previous week. The meeting was at the final round and the government decided to take an approach of investment in R&D as well as creation of separate specialized production lines for EVs in the existing production facilities.

Apart from this, companies are permitted to make an investment of about 500 million dollars in the new construction projects for EVs. The auto makers are supposed to make an investment in duration of three years from the date of approval under the SMEC. Only after following this criteria, the company can benefit from lower import duties. The requirement for investments in Research and Development is similar to the existing requirements of the Auto production-linked incentive (PLI) scheme.

The recent meeting was not attended by Vin Fast and Tesla. Despite this, several automakers such as Toyota, Škoda-VW, Hyundai, and Mercedes Benz India showcased liking for the scheme.

These interested automakers are quite worried about the amount of investment required for creation of specialized production lines for Electric Vehicles only. To make a big investment of amounts such as Rs. 4,000 crore, there should be a large-scale operation to make the project practical and successful. Automakers believe that investments in research and development will promote creation of advanced technology in Electric vehicles.

The reason for worries about the investment amount is due to 89,000 Electric vehicles being sold in India in the year 2023. The worth of these Electric vehicles were higher than Rs. 25 lakhs. This makes it difficult for local companies to make a large amount of investments. In midst of increasing disposable income levels of population and expansion of the Indian economy, the sales growth of Electric Vehicles is projected to hike at a quicker pace.

In conclusion, the Indian government aims to make sure that rising demand for Electric vehicles is fulfilled by local automakers only. The government also wants to build a favourable environment for production of advanced technologies and premium EV cars. To achieve these goals, it has implemented schemes like SMEC.

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Solid reason for GST reduction on two-wheelers

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Solid reason for GST reduction on two-wheelers
Autos, Business, Equities, Markets - January 16, 2025

Solid reason for GST reduction on two-wheelers

Solid reason for GST reduction on two-wheelers

CEO of Hero MotoCorp company, Niranjan Gupta stated that there is a solid reason for reduction of Goods and Services Tax (GST) on two-wheelers with engines of about 125 cc or less. These vehicles are not identified as luxury or harmful commodities. In contrast to this, these vehicles are considered as a means of transport for many people in the country. He further states that the government of India should focus in the direction of economic stability, investments and also long-term economic growth.

Although, GST is not the topic of the Union Budget discussion, he believes that lowering of GST to 18 percent in the two-wheeler’s vehicles with an engine of 125 cc or less compared to its current GST of 28 percent (for all two-wheelers) should be considered. The reason for this is these two-wheelers are most affordable and popular among the Indian population. Hero MotoCorp is considered as the largest manufacturer of two-wheelers in India. The company is not worried about the weakening demand in the urban auto market. It believes that this market’s consumption level has been unbalanced since Covid-19 pandemic.

Reasons
Reduction in GST will help two wheelers with engines of up to 125 cc to increase its demand in the market. This will be aided by the recovery of sales observed in the entry-level vehicles segment after a long period of slow demand.

The two-wheelers with engine less than or equal to 125 cc are not only non-sin and affordable goods but also creates employment. It plays a great role in creating indirect as well direct employment levels.

Gupta further states that policies of incentives or subsidies undertaken by the government should take into consideration the long-term perspective of growth. This will give business adequate time to adjust with the changes taking place in the economy due to implementation of government policies. He also states that the government’s focus on expanding employment generation projects should remain ongoing. This will help to create more employment opportunities for the population in the nation.

Shares of urban and rural consumption
After the pandemic, urban consumption played a significant role in taking the responsibility of growth in various segments. While rural demand was low back then. In recent times, rural demand has picked up the pace and is now in the returning phase. It has resulted in growth in consumption level between rural and urban areas more towards rural consumption. Due to this, there is a belief that urban consumption is weakening. It is important to understand that the urban area has played a major role in the proportion of consumption level till now.

The sales of Hero vehicles in urban areas had declined to 47 percent in the initial nine months of the current financial year compared to the 60 percent in the previous financial year.

The rural market consumption is able to exceed urban market consumption in recent months. This situation was particularly observed from the time of the festive season. Gupta stated that the growth in the rural market will act as an addition to the total growth in the two-wheeler industry of India. He further stated that the growth in rural consumption will be supported for the upcoming 6 to 8 quarters by factors such as good monsoons, high minimum support prices and also better kharif harvest season.

Gupta further states that rural consumption has taken some time to recover and it will lead to a positive impact on both the rural and urban market. Also, the economic growth will be observed at a range of 6 to 7 percent and supported by increasing capital expenditure. He thinks that overall growth will hike up in the near future.

Launch Plans of Hero MotoCorp
The company has decided to have a number of launches in the entry-level as well as premium two-wheeler segment to strengthen its position in the market. Along with this, the company is planning to launch its third EV scooter in the quarter of June.

To have success in sales and market share in the electric vehicle segment, one has to lead in terms of efficient cost structure. The company is working on its cost structure regarding electric vehicles and functioning without subsidies. As the company has considered the potential action of termination of subsidies for EV in the next few years.

The Hero Motocorp is focused on export as well as local sales. It is taking steps towards creating products which are customised according to the different needs of various markets. The company will also invest its funds in the top 10 global markets in the world. Gupta states that international business is one of the growth factors. Today, the company has its presence in around 48 countries in the world.

The company announced its entry in Brazil and is making efforts to establish their presence. It has also started its work in the Philippines and it is considered as the company’s entry in the Southeast Asian market. The company is also making progress in countries such Bangladesh, Mexico, and Colombia. Overall, this expansion has led to an increase in growth close to 40 percent in the international business. This growth is recorded in the initial nine months of the current financial year, along with a rise in the market share.

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Strong Consumer Sentiment Boosts Automobile Dispatches by 12% in 2024

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Indian automobile industry anticipates boost in demand by wedding season and recovery of infra projects
Business, Equities, Market News, Markets - January 6, 2025

Auto Components Industry Maintains Capex Plans Amidst Growth Moderation

Auto Components Industry Maintains Capex Plans Amidst Growth Moderation

The Indian Auto component industry is projected to have high single digits growth in the financial year 2025 by the Rating Agency ICRA. To estimate this growth rate of the Indian Auto component industry, ICRA used a sample of 46 auto ancillaries with total annual revenue of over Rs 3,00,000 crore in the financial year 2024. It is supported by the 14 percent growth recorded in the industry in the financial year 2024. It is important to point out that more than half of the Indian auto component industry sales is done by the domestic original equipment manufacturers (OEM) in India. In the current quarters, the automotive sales are observed to be slowing down. This could adversely impact the demand for auto components from the domestic OEMs.

Not only does the demand for automotive components for the manufacturing of vehicles slow down but also the demand for components in the after-sales markets. After having a strong growth for like two to three years, it is forecasted to slow down by five percent to seven percent in the financial year 2025.

The Indian automotive component industry close to one-third of the revenues comes from the export of automotive components. The export segment is also expected to face slowdown in growth due to fall in growth in consumer markets. Despite this, supplies to new platforms will rise due to vendor diversification steps taken by the global OEM companies and rise in outsourcing. The new platform refers to companies which incorporate the latest technologies and promote innovations. The OEM supplying the latest technologies models will be able to align better with the changing dynamics in the automobile industry and will also be able to generate growth. While vendor diversification will help companies to not remain dependent on a single entity and can diverse risk and make a more resilient supply chain. Both outsourcing and vendor diversification is a good opportunity for Indian auto component companies to increase their growth and become competitive with the global world.

In the European Union region, automotive companies announced shutdown of plants and big layoffs. This could be an opportunity for Indian auto components manufacturers in metal casting and forgings. The Indian companies will have opportunities in the international replacement or after-sales market segment due to ageing of vehicles and sale of used vehicles in the global markets.

The ICRA reports that the Indian auto components players will have opportunities in electric vehicles (EV), vehicle premiumisation and localisation of auto components. The growth for the auto components players will be supported by the changes in the regulatory norms. Currently, supply chanin of Electric Vehicles is 30 percent to 40 percent localised. Chassis components are produced locally which need minimum technological progress. Also considerable localisation is observed in control units, battery management systems and traction motors over the period. The battery cells are still imported and it accounts for 35 percent to 40 percent of the vehicle cost. Although it seems like localisation is a key advantage for growth of domestic OEMs, low level of localization can also act as an advantage for them. For instance, technological advancement can occur for the parts used in internal combusion engine (ICE) vehicles as well as production of components for vehicles which use alternate fuels.

While considering the growth of the auto component industry, it is important to take its profitability into consideration. As per the reports of ICRA, the sector’s operating margins are anticipated to remain in the range of 11 percent to 11.5 percent in the financial year 2025. One of the reasons for this is double and for some routes triple container rates due to disruption in the Red Sea route in the year 2024 as compared to the previous year. India’s auto components are exported around two-third to North America and Europe and around one-third of auto components are imported from these regions only. The considerable increase in freight rates would adversely impact profit margins for upcoming few quarters. The margins in the medium term will get advantage from good operating leverage, increased in value or components in the vehicle. However, it will also remain vulnerable to any kind of sharp volatility in foreign exchange rates and prices of commodities.

Despite moderate growth, ICRA forecasts the auto component industry to continue with its capital expenditure plans (Capex). The plan for the financial year 2025 will be around 15,000-20,000 crore and for the financial year 2026, it will be around 20,000-25,000 crore. It is expected that mostly internal accruals will be used for operating income of around 7 to 8 percent in the medium term. While funding for larger projects like battery cells localisation is through debt initially. Aside from capex used for capacity building and coming regulatory changes, the incremental investment will be used for development of advanced technology, products and EV components. Also according to ICRA, the industry’s liquidity position will remain in a good position especially for Tier-1 Suppliers due to stable cash flows and earnings. Also the coverage metrics will remain good due to stable internal accruals and low incremental debt financing despite rise in the cost of borrowings.

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Auto Sector Eyes 5% Growth in 2025

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Mahindra & Toyota Drive SUV Boom Amid Industry Challenges
Business, Equities, Market News, Markets - December 23, 2024

Mahindra & Toyota Drive SUV Boom Amid Industry Challenges

Mahindra & Toyota Drive SUV Boom Amid Industry Challenges

Mahindra & Toyota Drive SUV Boom Amid Industry Challenges
In 2024, India’s automotive industry has witnessed significant shifts, with Mahindra & Mahindra and Toyota Kirloskar Motor achieving record sales despite prevailing challenges. This trend underscores the evolving dynamics of the Indian car market, characterized by a growing consumer preference for SUVs and strategic adaptations by manufacturers.

Mahindra & Mahindra’s Performance
Mahindra & Mahindra has experienced a remarkable surge in sales, particularly in the SUV segment. In October 2024, the company reported its highest-ever SUV sales, delivering 54,504 vehicles—a 25% year-over-year increase compared to the same month in 2023.
NDTV
This achievement marks the second consecutive month of record-breaking sales for Mahindra, reflecting its successful alignment with consumer preferences favoring larger vehicles.

The company’s robust performance is further evidenced by its financial results. In the second quarter, Mahindra reported a 13.2% rise in profit to ₹38.41 billion, surpassing analysts’ expectations. This growth is attributed to higher SUV sales and a recovery in tractor demand, with SUV volumes rising by 19% despite industry-wide challenges.
Reuters

Toyota Kirloskar Motor’s Performance
Toyota Kirloskar Motor has also demonstrated impressive growth. In October 2024, the company reported a 41% year-over-year increase in sales, delivering 30,845 units. Domestic sales accounted for 28,138 units, while exports contributed 2,707 units.
The New Indian Express
This performance highlights Toyota’s strong market presence and its ability to meet the rising demand for SUVs in India.

Market Dynamics and Consumer Preferences
The Indian automotive market has been increasingly dominated by SUVs, with consumers showing a clear preference for these vehicles over smaller cars. This shift is evident in the sales figures of major manufacturers. For instance, Maruti Suzuki, traditionally known for its small cars, reported a 19.4% increase in SUV sales in October 2024, achieving record-high figures in this segment.

This trend towards SUVs is driven by several factors, including the perception of better safety, higher ground clearance suitable for diverse Indian terrains, and a growing aspirational value associated with owning larger vehicles. Manufacturers like Mahindra and Toyota have capitalized on this shift by expanding their SUV portfolios and introducing models that cater to the evolving preferences of Indian consumers.

Industry Challenges
Despite these successes, the industry faces challenges, including fluctuating demand and inventory management issues. In September 2024, dealer inventories reached critically high levels of up to 85 days, prompting concerns about overstocking. However, the festive season in October helped reduce these inventories to more manageable levels, as manufacturers and dealers offered promotions to boost sales.

Additionally, the industry has been navigating the transition towards electric vehicles (EVs) and adhering to stricter emission norms. While the demand for EVs is gradually increasing, the current market is still predominantly driven by internal combustion engine vehicles, particularly SUVs. Manufacturers are balancing the need to invest in future technologies with the immediate demand for conventional vehicles.

Strategic Implications for Investors
For investors, the strong performance of Mahindra & Mahindra and Toyota Kirloskar Motor indicates a positive outlook for companies with a robust SUV lineup and the ability to adapt to market trends. Mahindra’s consistent growth in SUV sales and its strategic positioning in the agricultural sector through its tractor business provide a diversified revenue stream, enhancing its investment appeal.

Toyota’s emphasis on quality and its expanding portfolio in the Indian market also make it a noteworthy player. Its ability to achieve significant sales growth amidst industry challenges reflects operational efficiency and market adaptability.

However, investors should remain cognizant of the broader industry challenges, including inventory management and the ongoing transition to EVs. Companies that effectively navigate these challenges while aligning with consumer preferences are likely to sustain growth and offer favorable returns.

Conclusion
The record sales achieved by Mahindra & Mahindra and Toyota Kirloskar Motor in 2024 underscore the dynamic nature of the Indian automotive market. The growing consumer preference for SUVs has been a significant driver of this growth, with manufacturers that align their strategies accordingly reaping substantial benefits. While challenges persist, the ability to adapt to market trends and manage operational complexities will be crucial for sustained success in this evolving industry landscape.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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Auto industry anticipates boost in demand by wedding season and recovery of infra projects
Business, Equities, Market News, Markets - December 20, 2024

Indian Auto Components Industry Grows 11.3% in H1 FY25

Indian Auto Components Industry Grows 11.3% in H1 FY25

The Indian auto components industry has demonstrated robust growth in the first half of the fiscal year 2024-25 (H1 FY25), achieving an 11.3% increase in market size compared to the same period in the previous year. According to a report by the Automotive Component Manufacturers Association (ACMA), the industry’s valuation rose from USD 36.1 billion in H1 FY24 to USD 39.6 billion in H1 FY25.

Market Dynamics and Consumer Preferences
Several key trends have contributed to this growth, reflecting evolving consumer preferences across various vehicle segments:

Passenger Vehicles (PVs): There has been a notable shift towards larger vehicles, particularly Utility Vehicles (UVs). The UV segment experienced a 13% increase in demand, with UV1 models—vehicles measuring between 4,000 to 4,400 mm in length and priced under ₹20 lakh—seeing a substantial 25% surge in sales.

Two-Wheelers: The market for motorcycles with higher engine capacities has expanded significantly. Sales of motorcycles with engine capacities ranging from 350cc to 500cc soared by 74%, indicating a consumer preference for more powerful two-wheelers.

Electric Vehicles (EVs): The EV segment exhibited mixed results. Overall EV sales increased by 22% in H1 FY25 compared to the same period last year. Electric two-wheelers (e-2Ws) led this growth with a 26% rise in sales. However, electric passenger vehicles (e-PVs) experienced a 19% decline in sales, suggesting potential challenges in consumer adoption or market offerings in this sub-segment.

Factors Driving Growth
The industry’s growth can be attributed to several factors:

Economic Recovery: Post-pandemic economic recovery has bolstered consumer confidence, leading to increased spending on automobiles and, consequently, auto components.

Government Initiatives: Policies promoting manufacturing and the adoption of electric vehicles have provided a conducive environment for industry expansion.

Technological Advancements: The integration of advanced technologies in vehicles has increased the demand for sophisticated auto components, contributing to market growth.

Challenges and Considerations
Despite the positive trajectory, the industry faces certain challenges:

Supply Chain Disruptions: Global supply chain issues, including semiconductor shortages, have impacted production schedules and could pose risks to sustained growth.

EV Adoption Barriers: The decline in e-PV sales highlights potential obstacles in the electric vehicle market, such as inadequate charging infrastructure, higher upfront costs, or limited consumer awareness.

Outlook
The Indian auto components industry is poised for continued growth, supported by favorable economic conditions and evolving consumer preferences. However, addressing supply chain challenges and enhancing the ecosystem for electric vehicles will be crucial for sustaining this momentum.

In conclusion, the 11.3% growth in H1 FY25 underscores the resilience and adaptability of the Indian auto components industry amid changing market dynamics and consumer behaviors.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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Auto industry anticipates boost in demand by wedding season and recovery of infra projects
Business, Equities, Market News, Markets - December 19, 2024

Auto Industry Nears ₹25,000 Cr Import Reduction Target

Auto Industry Nears ₹25,000 Cr Import Reduction Target

The Indian automotive industry is on course to achieve its ambitious goal of reducing imports by ₹25,000 crore (approximately $3 billion) by the end of the current fiscal year. This initiative focuses on increasing the localization of advanced components such as electric motors, airbags, and automatic transmissions. Industry assessments indicate that significant progress has been made, with further advancements anticipated in the coming years.

Localization Efforts and Achievements
In an effort to reduce dependency on imports, the Society of Indian Automobile Manufacturers (SIAM) and the Automotive Component Manufacturers Association (ACMA) have spearheaded localization programs targeting 11 critical categories, including drive transmissions, engines, steering systems, electronics, and electrical parts. These components account for about 70% of total imports in the sector.

Between FY20 and FY22, the industry achieved net localization gains of ₹7,018 crore. Building on this momentum, there is an ongoing effort to realize an additional ₹17,977 crore in net localization by FY25. This cumulative effort is expected to meet the ₹25,000 crore import reduction target set for the current fiscal year.

Shradha Suri Marwah, President of ACMA, highlighted the industry’s progress, stating, “Value-addition from the Indian auto components industry has gone up significantly in the last couple of years. In the first phase (till FY22), we achieved double the target of attaining localization level at about 6%. The second phase is underway. The industry is targeting deepening localization by another 15%.”
ECONOMIC TIMES

Investments and Technological Advancements
To support these localization efforts, component manufacturers are investing in new facilities and technologies. This includes the development of advanced manufacturing processes and the adoption of cutting-edge technologies to produce complex components domestically. Such investments not only reduce import dependence but also enhance the competitiveness of Indian manufacturers in the global market.

Government Initiatives and Policy Support
The Indian government has introduced several initiatives to bolster the automotive sector’s localization efforts. The Performance-Linked Incentive (PLI) scheme, for instance, aims to promote the production of electric vehicles and hydrogen fuel vehicles, with an allocation of ₹26,000 crore (US$3.61 billion). This scheme is expected to generate approximately 750,000 direct jobs in the auto sector and reduce the country’s carbon footprint.
WIKIPEDIA

Additionally, the government’s focus on developing infrastructure for electric vehicles and promoting sustainable mobility solutions further supports the industry’s localization objectives.

Impact on the Indian Economy
The localization drive is anticipated to have a positive impact on the Indian economy by reducing the trade deficit and fostering the growth of the domestic manufacturing sector. By producing critical components locally, the industry can retain more value within the country, create employment opportunities, and stimulate economic development.

Moreover, the increased focus on localization aligns with India’s vision of becoming a global automotive hub. Projections indicate that the Indian auto market is poised to reach USD 300 billion by 2026, driven by rising income levels, urbanization, and a burgeoning middle class.
ECONOMIC TIMES

Challenges and Future Outlook
While significant progress has been made, the industry faces challenges in achieving deeper localization. These include the need for substantial capital investment, development of technical expertise, and ensuring quality standards that meet global benchmarks.

To address these challenges, collaboration between industry stakeholders, government bodies, and educational institutions is essential. Such partnerships can facilitate skill development, research and development, and the creation of a robust supply chain ecosystem.

Looking ahead, the Indian automotive industry is expected to continue its localization efforts, with reassessments and the setting of new targets in consultation with the government. This ongoing commitment to reducing import dependence and enhancing domestic manufacturing capabilities positions India favorably in the global automotive landscape.

In conclusion, the Indian automotive industry’s concerted efforts towards localization are yielding tangible results, bringing the sector closer to its import reduction targets. With continued investments, policy support, and collaborative initiatives, the industry is well-positioned to achieve its goals and contribute significantly to the nation’s economic growth.

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TCS Unveils Pace Studio in Philippines to Boost Digital Innovation

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Indian automobile industry anticipates boost in demand by wedding season and recovery of infra projects
Business, Equities, Market News, Markets - December 11, 2024

November 2024 Auto Sales: A Market in Flux

November 2024 Auto Sales: A Market in Flux

The Indian automobile industry in November 2024 presented a vivid contrast, with the passenger vehicle (PV) segment grappling with challenges while the two-wheeler (2W) market enjoyed a resurgence. Data from the Federation of Automobile Dealers Associations (FADA) highlighted a 14% decline in car sales juxtaposed with a 16% growth in two-wheeler sales, reflecting a tale of two distinct consumer behaviors.

Passenger Vehicles: A Slowdown Post Festive Highs
Passenger vehicle sales slumped in November, marking a sharp decline from the record-breaking October sales fueled by festive demand during Dussehra and Diwali. The steep fall points to an exhausted pent-up demand, signaling market normalization after the seasonal high.

Segmental Challenges:
While SUVs and utility vehicles (UVs) performed well during October’s festivities, sedans and hatchbacks saw waning interest. The UV segment has increasingly captured market share, accounting for nearly half of the total PV sales, as highlighted by robust October growth rates of 13.9% year-on-year (YoY). However, this shift may have temporarily disrupted supply chains, contributing to November’s downturn.

Rising Costs and Interest Rates:
Higher vehicle prices, coupled with elevated interest rates on auto loans, deterred prospective buyers. Rising input costs, particularly for essential components like steel and semiconductors, have driven automakers to hike prices, impacting affordability for middle-income consumers.

Inventory Challenges:
Dealers struggled with high inventory levels post-festivals, especially in Tier-II and Tier-III markets. The Society of Indian Automobile Manufacturers (SIAM) noted that the increase in wholesale dispatches ahead of festivals did not translate into sustained retail demand, leading to overstocking.

Two-Wheelers: Resilience Amid Adversity
In contrast to passenger vehicles, two-wheelers emerged as a growth story in November, continuing their festive-season momentum. The 16% YoY growth reflects strong rural demand, affordability, and evolving urban mobility needs.

Rural Demand Drives Growth:
The revival of rural demand, aided by improved agricultural incomes and targeted financing options, played a significant role in boosting sales. Hero MotoCorp and TVS Motors capitalized on this trend, registering robust sales growth during the month.

Shift to Electric Vehicles (EVs):
Electric two-wheelers continued gaining traction, reflecting changing consumer preferences for sustainable and cost-efficient options. Companies such as TVS Motors reported a 45% YoY surge in EV sales during October, and the trend likely continued into November.

Affordability and Accessibility:
Two-wheelers remain the preferred choice for middle-income households due to their affordability. Rising fuel prices have also nudged consumers toward scooters and motorcycles, which are economical and convenient for daily commutes.

Broader Market Implications
Export Markets Thrive:
Both PV and 2W manufacturers reported significant growth in export markets. Royal Enfield witnessed a 150% jump in exports, leveraging its strong brand presence in South Asia and Latin America. Similarly, Bajaj Auto and Hero MotoCorp achieved double-digit export growth, diversifying revenue streams amid domestic challenges.

Urban vs. Rural Divide:
The urban-rural split continues to shape the auto market. While urban centers saw a slowdown in PV demand due to economic uncertainties, rural regions fueled two-wheeler growth, aided by better monsoon outcomes and favorable MSP (Minimum Support Price) policies for crops.

EVs Gain Momentum:
Across segments, the focus on electric mobility intensified. Automakers expanded EV portfolios to cater to rising demand, driven by government incentives, lower running costs, and growing environmental awareness among consumers.

Policy Recommendations
Credit Support:
Policymakers should enhance credit access for consumers, particularly in rural areas, to sustain two-wheeler demand. Interest rate subsidies or targeted financing schemes could address affordability challenges in the PV segment.

EV Incentives:
The government should continue supporting EV adoption through subsidies and infrastructure development, such as expanding charging networks. Addressing bottlenecks in EV component supply chains could further accelerate growth.

Rural Development:
Strengthening rural infrastructure and enhancing income opportunities will indirectly boost auto demand. Policies targeting improved road connectivity and last-mile mobility solutions can create new opportunities for automakers.

Conclusion
November 2024’s auto sales highlight the complexities of India’s automobile market. While passenger vehicles face short-term challenges, the two-wheeler segment’s robust performance reflects resilience and adaptability. For stakeholders across the value chain, understanding these dynamics and aligning strategies accordingly will be critical. Investors, in particular, should focus on long-term themes such as electrification and rural penetration to navigate the sector’s evolving landscape.

The Indian auto industry stands at a crossroads, with opportunities in sustainable mobility and export growth offering a pathway to future resilience. By leveraging these trends, the sector can weather current headwinds and emerge stronger in the years to come.

The image added is for representation purposes only

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Hyundai Q3 FY2025 Sees 19% Profit Drop Amid Lower Sales and Rising Costs
Business, Equities, Market News, Markets - September 13, 2024

Hyundai Targets Revival with New SUVs and India-Made EV by 2025

Hyundai Targets Revival with New SUVs and India-Made EV by 2025

Hyundai Motor, once the dominant foreign automaker in India, is determined to regain its lost ground in the country’s rapidly evolving automotive landscape. The South Korean giant is embarking on an ambitious product offensive, backed by a planned $3 billion public listing of its Indian subsidiary, to fend off increasingly formidable domestic rivals.

The company’s strategy revolves around a multi-pronged approach that aims to address the shifting consumer preferences and intensifying competition in the world’s third-largest car market.

At the heart of Hyundai’s revival plan is a promise to introduce a slew of new SUV models, including its first India-made electric vehicle (EV) early next year, followed by at least two additional gasoline-powered SUVs by 2026. This product onslaught is part of the company’s broader efforts to strengthen its presence in the high-margin SUV segment, which has become the hottest-selling vehicle category in India, displacing the once-favored small cars.

Hyundai’s market share in India has been on a gradual decline, dropping from 17.5% four years ago to 14.6% currently, as domestic giants like Tata Motors and Mahindra & Mahindra have gained ground with their own range of SUV offerings. Meanwhile, Toyota, another major foreign rival, has also seen its share rise to 6% from 4% over the same period.

V G Ramakrishnan, a management expert, acknowledged Hyundai’s challenging position in the Indian market. He noted that the company’s primary focus should be on retaining its market share, and the only way to achieve this is through a faster rollout of new products.

To address this challenge, Hyundai has outlined an ambitious product pipeline that includes not just the introduction of new SUVs, but also a strategic shift towards higher-margin offerings. The company’s plan to list its Indian subsidiary on the local stock exchanges, seeking to raise $3 billion, underscores its bullish outlook on the country’s automotive market.

In April, during his visit to India, Euisun Chung, the Executive Chair of Hyundai Motor Group, expressed the company’s pride in consistently securing the second-largest market share in the country’s dynamic automotive landscape.

The introduction of Hyundai’s first India-made EV in 2025 will be followed by four more EV models by the end of the decade, as the company evaluates plans to establish the country as a regional EV export hub. This move aligns with Hyundai’s broader strategy to boost its global sales by 30% by 2030, with a focus on higher-priced, premium vehicles.

In the gasoline-powered segment, Hyundai’s upcoming launches include a crossover model based on its Bayon offering sold in global markets, competing against Maruti’s Fronx crossover and Tata’s Nexon SUV. The second gasoline-powered SUV is expected to be larger than the popular Creta model and will likely compete with Mahindra’s XUV700.

The new SUV models are expected to contribute around 120,000 additional units per year to Hyundai’s sales in India, further reinforcing the company’s position in the market.

However, Hyundai’s rivals are also not standing still. Tata Motors, the country’s top-selling EV maker with a market share of over 75%, has announced plans to launch five more EVs over the next three to four years, taking its total EV portfolio to 10. Mahindra, another prominent domestic player, has plans to introduce seven electric SUVs and six new gasoline-powered SUVs by the end of the decade.

An Indian supplier to Hyundai cautioned that the strategies that have worked for the company in the past may not be sufficient to secure its future success. The Indian supplier to Hyundai cautioned that the strategies that have worked for the company in the past may not be sufficient to secure its future success. An Indian supplier to Hyundai cautioned that the strategies that have worked for the company in the past may not be sufficient for its future success.

Regaining its lost ground will require Hyundai to strike a delicate balance between market share and profitability. The company’s “premiumization” strategy, which has helped it record some of the highest profit margins among its peers in India, has come at the cost of sales volumes.

As Hyundai prepares for its public listing, the company will need to strike a careful balance between its focus on higher-margin offerings and maintaining its market share. “If there is a drop in either sales or profits, the company can be questioned by shareholders,” cautioned management expert V.G. Ramakrishnan.

Hyundai’s journey in India has been a rollercoaster ride. From its early success with affordable hatchbacks like the Santro to its recent dominance in the SUV segment, the company has navigated the challenges of this dynamic market. Now, as it embarks on a new phase of growth, Hyundai faces the crucial task of reclaiming its position as the leading foreign automaker in India, while also satisfying the demands of its future public shareholders.

The image added is for representation purposes only

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