The Indian auto cars industry has really come a very long way after the country's independence and having transformed from a locally-focused and protected industry to rising as one among the fastest rising auto cars markets across the world. Most of the top players of the world have now established their presence in this imperative market. In fact, concurrent induction and liberalization policies of foreign competition have changed the cars market dynamics in auto industry in the past few decades. Indian auto cars industry is seen to go through a segment of rapid growth and transformation which will continue in the coming years, driven mainly by growth in infrastructure development and economy. This industry is an essential driver of economic development, due to its deep backward and forward linkages, which have a solid multiplier effect.
Changing Needs of Customer Alter Cars Market Dynamics
The auto car industry has seen different shift in the demand patterns across car categories in the past few years. In the passenger vehicles segment, for example, a steady rise in demand for the compact cars has been there away from the mini cars. Although small in the terms of market's share, luxury/high-end car market is developing quickly, driven by changing client aspirations and preferences and launch of many more models. In five years, average age of luxury car buyers has come from 45 years down to 40 years. It is expected to decrease to almost 35 years in next five years.
Although demands for high-end, luxury cars continue to be solid, the small cars market will rule the Indian market continuously. In fact, the foreign OEMs who have entered the Indian market with high-end/ luxury vehicles now are looking to play volume game and increasing focus on small segments to make money on the burgeoning demands from this segment, accounting for bulk car sales in the Indian market. Moreover, between stiff competitions, considering the value and price conscious Indian consumer's preferences for smaller vehicles, OEMs are also introducing smaller cars having certain features that usually are found in high-end or large vehicles.
Latest Technology: Driving the Changes
Technological innovation in the Indian auto cars industry over the last decade has allowed up gradation, straight from the planning and design stage to product's development stage, and also has played a vital role in enhancing the general performance of the products. Rising disposable incomes and healthy economic growth has led to India emerge as a fast rising auto cars market. Further, the lower costs of skills and operations in R&D, design, and manufacturing has resulted in India become one among the most favorable destinations worldwide for manufacturing and investment operations.
Entry of international companies has altered the Indian cars manufacturing landscape favorably; with adaption of global technologies. The great role of IT in speeding the growth procedure and in managing development of auto cars companies is assuming great prominence. Increasingly and globally in the Indian markets too, technology is driving vital changes and cars companies are aligning IT strategies in proportion to their overall and main business strategies. Companies now are realizing the advantages of implementing IT solutions, particularly as the level of business rises. Consequently, there are greater partnerships and alliances being established between the IT solution providers and auto companies with an aim to manage operations in a better way and meet vital challenges.
Industry at Crossroads
The2006-2016 Automotive Mission Plan aims to make a worldwide automotive hub in India, which would engage doubling the auto cars sector's contribution to the India's GDP by increasing its turnover to nearly US$ 145 billion. According to the Ministry of Public Enterprises and Heavy Industries, by 2020, passenger vehicles segment is predicted to grow to 9 million units. Seeing the expected rise in vehicles population in the upcoming decade, the need for environment-friendly and efficient recycling facilities will assume criticality, particularly given the rising interest of worldwide OEMs in India in addition to increasing awareness about the ecological issues. Despite the various challenges, auto cars industry's long-term forecast remains bright. The growth will be mainly driven by healthy economic development, rising aspirations and changing consumer preferences, increased spending on the infrastructure development, new product launches and push on rural economy, amongst others.
Expansion & Growth Strategies
This car industry's development will be mainly driven by stable economic policies and healthy economic growth, a large and growing domestic market also focuses on servicing the export opportunities owing to proximity to the other Asian and budding markets, amongst others. To guarantee sustainable and long-term growth, auto car companies must focus on adopting three pronged strategy - investing in the R&D for products development, extending existence to the non-auto verticals, expanding geographical presence even beyond domestic boundaries. OEMs need to expand distribution and service networks, manufacturing facilities as well as enhance technological capabilities. The component suppliers also should scale up and organize themselves to meet all the active demands of OEMs, foreign and domestic. From a very long-term growth viewpoint it is vital, for both the OEMs and component suppliers to emphasize on innovation and R&D to outfit themselves with the essential capabilities to build up cars that meet the future market's needs, in order to stay ahead always.
The cars industry is however to completely address the dormant demands for mobility in semi-urban and rural markets. Going forward, the OEMs will put more thrust on these particular markets, driven by needs to increase sales and respond to the growing competition in the large cities. Except for rural consumers, youth and women will be the main target client groups for car companies in the next decade.
Automotive companies will make more hostile expansion to broaden their presence, not only within the local market, but also across worldwide markets. The upcoming years will observe vehicle manufacturers increasing their existence across the breadth and length of the country, largely into the tier III and tier II markets, to reach to the great untapped demands potential in both of these markets as much as possible.