10 Groundbreaking Trends Shaking Up India’s Automobile Industry

The Indian automobile industry is one of the core sectors of the country’s economy and a key driver of growth and employment. However, the industry has faced many challenges in recent years, such as slowing demand, regulatory changes, environmental concerns, and the COVID-19 pandemic. At the same time, the industry is also witnessing some major transformations that are reshaping its future, such as digitalization, personalization, shared mobility, connected vehicles, autonomous driving, alternative fuels, circular economy, customer-centricity, new business models, and collaboration. In this article, we will identify and analyze some of these disruptive trends and their implications for the Indian automobile sector.

Digitalization: Driving Better Customer Experience

Customers are increasingly looking up cars online and expecting a seamless and convenient digital experience throughout their purchase journey. According to a survey by PGA Labs, 75% of customers use online channels for research and comparison before buying a car, and 65% of customers prefer to book a test drive online. Moreover, 40% of customers are willing to buy a car online if given an option.

Digitalization is also enabling new ways of engaging with customers, such as virtual showrooms, augmented reality, chatbots, and online financing. For example, MG Motor India launched its digital studio in Bengaluru in 2019, which allows customers to explore and experience its cars through interactive digital screens and tablets. Similarly, Maruti Suzuki launched its Smart Finance platform in 2020, which offers customers an end-to-end online solution for car finance.

Digitalization is not only enhancing customer experience but also improving operational efficiency and cost optimization for automakers and dealers. For instance, digital tools can help optimize inventory management, supply chain planning, after-sales service, and customer feedback.

Electric Vehicles: A Fast-Growing Reality

India’s electric vehicle (EV) market gains momentum with fresh players and government incentives. During FY17-FY20, EVs recorded a growth rate of 44%, with nearly one million units sold in FY202. The majority of these sales were in the two-wheeler (2W) and three-wheeler (3W) segments, which accounted for 97% of the total EV sales in FY20.

The EV adoption in India is driven by several factors, such as rising environmental awareness, lower total cost of ownership (TCO), improving battery technology and charging infrastructure, and supportive policies. For example, the government’s FAME-II scheme provides subsidies for EVs based on battery capacity and range. The government has also reduced the GST rate on EVs from 12% to 5% and allowed battery swapping for 2Ws and 3Ws.

According to a survey by PGA Labs, consumer preference for EVs has increased by 10%, from 39% in 2019 to 49% in 2020. Moreover, 35% of buyers are willing to pay a premium of more than INR 1 lakh for an EV. However, some challenges remain for EV adoption in India, such as high upfront cost, range anxiety, lack of standardization, and consumer awareness.

Vehicle Connectivity: Beyond Just a Car

Connectivity in vehicles is still in a nascent stage in India but it is expected to grow rapidly with the entry of global OEMs and rising consumer demand for smart features. According to Frost & Sullivan, the connected car market in India is projected to grow at a CAGR of 22.2% from 2019 to 2025.

Connected vehicles offer various benefits for customers

Some possible additional sentences are:

  • Connected vehicles offer various benefits for customers, such as enhanced safety, convenience, entertainment, navigation, remote diagnostics, and predictive maintenance.
  • Connected vehicles also enable new services and business models for automakers and service providers, such as data monetization, over-the-air updates (OTA), subscription-based features, mobility-as-a-service (MaaS), and vehicle-to-everything
  • Vehicle-to-everything (V2X) communication, which allows vehicles to exchange data with other vehicles, infrastructure, devices, and pedestrians. For example, Tata Motors has partnered with Microsoft to develop connected car features using Azure cloud platform and V2X technology.

Some of the benefits of vehicle connectivity include enhanced safety, convenience, entertainment, navigation, remote diagnostics, and predictive maintenance. However, some challenges also exist, such as data privacy, cybersecurity, standardization, and regulation.

Autonomous Driving: A Distant Dream?

Autonomous driving is one of the most disruptive and futuristic trends in the global automobile industry. However, in India, it is still a distant dream due to various technical, legal, social, and infrastructural barriers. According to Frost & Sullivan1, the penetration of autonomous vehicles in India is expected to be less than 1% by 2030.

Some of the factors that hinder the development and adoption of autonomous driving in India are:

  • The complex and chaotic traffic conditions in India, which pose a challenge for the sensors and algorithms of autonomous vehicles to detect and respond to various scenarios.
  • The lack of adequate road infrastructure, such as lane markings, traffic signs, signals, and road quality.
  • The lack of clear regulations and policies for testing and deploying autonomous vehicles on public roads.
  • The low consumer awareness and acceptance of autonomous vehicles, especially in terms of safety, reliability, and affordability.

However, some initiatives are underway to explore the potential of autonomous driving in India. For example:

Alternative Fuels: A Greener Choice

Alternative fuels are another trend that is transforming the Indian automobile sector. Alternative fuels refer to any fuel other than gasoline or diesel that can power a vehicle. Some examples are compressed natural gas (CNG), liquefied petroleum gas (LPG), ethanol, biodiesel, hydrogen, and synthetic fuels.

Alternative fuels offer various advantages over conventional fuels

Some possible additional sentences are:

  • Alternative fuels offer various advantages over conventional fuels, such as lower emissions, better fuel efficiency, lower cost, energy security, and reduced dependence on oil imports.
  • Alternative fuels also help meet the government’s targets for reducing carbon footprint and improving air quality. For example, the government has mandated that all vehicles sold in India should be BS-VI compliant from April 2020 onwards. BS-VI is a stricter emission norm that requires lower sulfur content in fuel and higher use of catalytic converters.
  • Alternative fuels also create new opportunities for innovation and collaboration among various stakeholders. For example, Indian Oil Corporation (IOC) has partnered with Praj Industries to set up ethanol plants using agricultural waste. Similarly, Reliance Industries has collaborated with BP to produce low-carbon synthetic fuels using carbon capture and utilization technology.

Circular Economy: A Win-Win Solution

Circular economy, the ingenious economic paradigm, emerges as a transformative system ceaselessly striving to obliterate waste and bestow prolonged lifespans upon products and materials through the virtuous cycle of reusing, repairing, remanufacturing, and recycling. Embracing the ethos of circular economy unfolds a dual triumph, harmonizing both the environment and the economy in symphony. With its remarkable prowess, it orchestrates a reduction in greenhouse gas emissions, curtails resource consumption, and curbs the generation of wasteful detritus. Simultaneously, it unfurls a tapestry of fresh employments, unexplored markets, and resplendent value, fostering a future adorned with limitless possibilities.

The Indian automobile industry can benefit from adopting circular economy practices in various ways, such as:

  • Designing vehicles and components for durability, modularity, and recyclability
  • Implementing vehicle scrappage policy to phase out old and unfit vehicles and recover valuable materials
  • Promoting remanufacturing and refurbishing of auto parts and components
  • Encouraging reuse and sharing of vehicles and mobility services
  • Developing reverse logistics and waste management systems for end-of-life vehicles

According to a report by Material Economics1, circular economy can create a net value of USD 624 billion per year for India by 2050, equivalent to 30% of its current GDP. The report also estimates that circular economy can reduce India’s greenhouse gas emissions by 44% by 2050.

Personalization: Catering to Customer Needs

Personalization, the avant-garde wave sweeping through the Indian automobile industry, epitomizes the art of tailoring bespoke products and services to cater to the idiosyncratic desires, preferences, and expectations of discerning customers. With its transformative prowess, personalization not only amplifies customer satisfaction, loyalty, and retention but also forges an extraordinary realm of distinction and competitive edge for automakers, setting them apart amidst a sea of contenders.

There are several avenues to achieve personalization, including:

  • Offering a wide range of options and features for customers to choose from
  • Providing personalized recommendations and offers based on customer data and behavior
  • Enabling customers to co-create and co-design their own vehicles using digital platforms
  • Delivering personalized after-sales service and support based on customer feedback

Some examples of personalization in the Indian automobile industry are:

  • Maruti Suzuki’s iCreate platform that allows customers to customize their cars with various accessories and graphics
  • Hyundai’s Click to Buy platform that offers customers a personalized online car buying experience with 360-degree views, virtual test drives, and doorstep delivery
  • Tata Motors’ Harrier Camo Edition that offers customers a camouflage-themed exterior and interior with various accessories

New Business Models: Creating New Value Propositions

The Indian automobile industry is also witnessing the emergence of new business models that create new value propositions for customers and stakeholders. These business models leverage digital technologies, customer data, and innovative partnerships to offer new products and services that address the changing needs and preferences of customers. Several instances of these business models include::

  • Vehicle subscription: This model allows customers to pay a monthly fee to access a vehicle of their choice without owning it. The fee covers maintenance, insurance, and other services. This model offers customers flexibility, convenience, and affordability, as they can switch vehicles as per their needs and avoid the hassles of ownership. For example, Zoomcar offers ZAP Subscribe, a vehicle subscription service that allows customers to choose from various plans and models.
  • Mobility-as-a-service (MaaS): This model integrates various modes of transport, such as public transport, ride-hailing, car-sharing, bike-sharing, etc., into a single platform that offers customers seamless and convenient mobility solutions. This model reduces the need for private vehicle ownership and promotes shared and sustainable mobility. For example, Ola offers Ola Mobility Platform, a MaaS platform that connects customers with various mobility options such as cabs, autos, bikes, buses, etc.
  • Vehicle-to-grid (V2G): This model enables electric vehicles to act as mobile energy storage units that can supply electricity to the grid or other devices when not in use. This model creates value for vehicle owners, grid operators, and energy providers by optimizing energy usage, reducing costs, and enhancing grid stability. For example, Mahindra Electric has partnered with NITI Aayog to pilot a V2G project in Delhi.

Collaboration: The Key to Success

The Indian automobile industry is also witnessing increased collaboration among various stakeholders to leverage their strengths and capabilities and create synergies. Collaboration is the key to success in the evolving and competitive market, as it enables innovation, efficiency, and customer-centricity. Some examples of collaboration in the Indian automobile industry are:

  • OEMs collaborating with technology companies to develop connected, electric, and autonomous vehicles. For example, Tata Motors has partnered with Google to integrate Android Automotive OS in its Nexon EV.
  • OEMs collaborating with start-ups to access new technologies, solutions, and markets. For example, Hyundai has invested in Revv, a car-sharing start-up that offers self-drive rental cars.
  • OEMs collaborating with each other to share platforms, components, and resources. For example, Toyota and Suzuki have formed a global alliance to co-develop hybrid and electric vehicles for India and other markets.


The Indian automobile industry is undergoing a major transformation driven by various trends such as digitalization, electrification, connectivity, autonomy, alternative fuels, circular economy, personalization, new business models, and collaboration. These trends offer opportunities and challenges for the industry players to create value for customers and stakeholders. To succeed in the future market, the industry players need to adopt a customer-centric approach, embrace innovation and technology, leverage partnerships and ecosystems, and align with the government’s vision and policies.


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