South Asia
www.ibef.org
Look at even export of automobile parts. Export rose by over 22%.
India's auto exports zoom 22% in Q1 on record car shipments; Maruti grabs nearly half the pie | IBEF
India’s automobile exports rose 22% YoY in Q1 FY26 to 1.46 million units, led by record passenger vehicle shipments and robust growth in two-wheelers, commercial, and three-wheeler segments.
The prospects for 2025 does not look good following higher car sales in 2024. 2024 increase was driven by post covid pent-up demand.
India is an interesting story - Two wheelers (and even 3 wheeler autos - tuktuks) count as "Cars" in India.
Two wheelers count as 78% for all "vehicles" made in India. Actual four wheeler cars are just 17% of this number.
Here is a nice wrap-up from January 2025 (note the yellow highlighted sections).
A year in review : The Indian auto sector | 2024
Read our latest insights on A year in review : The Indian auto sector | 2024climatedot.org
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A year in review : The Indian auto sector | 2024
Mitt Siddhpura, Akhilesh Magal on E-mobility
January 17, 2025
As we close the chapter on 2024, India’s automotive sector reflects a dynamic narrative of challenges, resilience, and transformation. From post-COVID growth to a recent slowdown, shifting consumer preferences, and reduced EV subsidies, the industry reflects a mix of resilience and uncertainty.
With insights backed by data, charts, and expert analysis, we explore the journey of the auto sector from pre-pandemic highs to the uncertainties of today, and what 2025 and beyond might hold for the Indian economy’s critical pillar - the automotive industry.
Background
India's auto sector is a cornerstone of the country’s economic growth, significantly contributing to GDP, employment generation, and attracting Foreign Direct Investments (FDIs).
Urbanization, rising incomes, and infrastructure development are playing a pivotal role in the demand and growth of the auto sector. Further the movement of the auto market towards cars, especially SUVs suggest that cars are an important positional good i.e. something that people derive social standing from. Additionally, the transition to electric vehicles (EVs) is central to India's sustainability goals, supported by government initiatives like FAME and PLI schemes. Hence, monitoring the sector’s growth is key to understanding India's economic trajectory, global competitiveness and clean-tech innovation.
In this article, we delve into how the automotive sector has evolved over the years, focusing on its post-COVID recovery and outlook for 2025 and beyond.
Looking back | The growth journey - 2017 to 2024
During the pre-COVID era (2017–2020), India’s automotive industry experienced steady growth, driven by consistent demand and incremental sales across segments. However, the COVID-19 outbreak (2020–21) brought unprecedented challenges. While the pandemic was a global phenomenon, India’s economy faced a sharper impact due to stricter lockdown measures and mobility restrictions. This led to production halts, supply chain disruptions, and a significant decline in consumer demand.
The industry also witnessed a notable surge in automobile prices, driven by two key factors:
These factors collectively led to a 50% increase in Average Selling Price (ASP) of passenger vehicles from ₹7.6 lakh in FY19 to ₹11.5 lakh in FY24, prompting a shift in consumer preferences.
- A global shortage of critical automobile components, particularly semiconductors.
- The simultaneous implementation of BS-VI emission norms, which increased production costs.
View attachment 20430
Figure 1: Average Selling Price (ASP) of passenger vehicles
However, post COVID session (2021-2024) has witnessed pent-up demand, a strong recovery and rebound in sales despite the significant hike in automobile prices.
Figure 2: Vehicular category-wise sales | 2017-2024
While the industry observed a growing demand for premium and aspirational vehicles, sales of entry-level models struggled. During the first half of the FY22 compared to the same period in 2018–19, sales of passenger cars, including entry-level hatchbacks, declined by 24.7%, while utility vehicle sales surged by an impressive 111.6%. As reported in The Indian Express, cars priced above ₹10 lakh experienced a fivefold faster growth compared to those priced below ₹10 lakh.
This trend underscores the ongoing distress in the lower end of the auto segment, which has a cascading effect on the entry-level car market. Many consumers in this segment typically upgrade from two-wheelers, but the economic strain has limited their ability to do so. India, with a car ownership rate of just 7.5%, lags far behind other nations, reflecting its nascent automotive penetration.
Figure 3: Car ownership across various countries
View attachment 20432
Two-wheelers (2Ws) have been the back-bone of India’s auto-sector, remaining the most preferred mode of transportation for millions. In 2024, 2Ws constituted for ~78% of all vehicular sales.
Figure 4: Vehicular sales by category | 2024
View attachment 20433
Furthermore, 2Ws sales have shown significant progress with a double digit growth rate of 11% Year-on-Year (YoY) in 2024.
Figure 5: Two-wheeler sales | 2017-2024
However, a closer look at model-wise sales of two-wheelers reveals a notable trend similar to four-wheelers: the growing premiumization of vehicles. Between 2023 and 2024, premium two-wheelers outperformed mass-market commuter models, recording significantly higher growth rates as outlined in the figure below.
Figure 6: Two-wheeler vehicle segment growth rate FY2023-24
Moreover, while two-wheeler sales are still lower than the peak in 2019 in the pre-pandemic era, the four-wheeler sales have significantly increased by 30% in the same period.
Figure 7: Four-wheeler sales | 2017-2024
2024 | The beginning of a slowdown?
The post-pandemic recovery of the Indian automotive industry has been a story of resilience and growth, but 2024 marks the beginning of an industry-wide slowdown after two consecutive years of strong demand. While overall vehicle sales remained subdued for most of the year, October stood out as an exception due to the alignment of three major festivals—Navratri, Dhanteras, and Diwali—in the same month.
Figure 8: Vehicular category-wise monthly sales | 2024
Uncharacteristically, December—the month typically associated with end-of-year discounts and high sales—saw a decline in demand, disrupting historical trends. According to an Economic Times report, Indian car dealers recorded a surprising 2% drop in sales in December 2024, reflecting broader economic pressures.
Top Country Estimates for 2025
Top Two-Wheeler Manufacturing Countries
Summary Table| Rank | Country | Approx. Production (Units/year) | Notable Brands |
|---|---|---|---|
| 1 | India | 20+ million | Hero, Bajaj, TVS, Royal Enfield |
| 2 | China | 15–18 million | Lifan, Zongshen, Yadea |
| 3 | Indonesia | 5–6 million | Honda, Yamaha |
| 4 | Vietnam | 3+ million | Honda, Yamaha, Piaggio |
| 5 | Thailand | 2+ million | Honda, Yamaha |
| 6 | Pakistan | 1.5–2 million | Atlas Honda, United |
| 7 | Brazil | ~1 million | Honda, Yamaha |
| 8 | Japan | 0.5–1 million | Honda, Yamaha, Suzuki, Kawasaki |
| 9 | Taiwan | ~600,000 | Kymco, SYM, Gogoro |
| 10 | Italy | ~500,000 | Piaggio, Ducati |
The prospects for 2025 does not look good following higher car sales in 2024. 2024 increase was driven by post covid pent-up demand.
India is an interesting story - Two wheelers (and even 3 wheeler autos - tuktuks) count as "Cars" in India.
Two wheelers count as 78% for all "vehicles" made in India. Actual four wheeler cars are just 17% of this number.
Here is a nice wrap-up from January 2025 (note the yellow highlighted sections).
A year in review : The Indian auto sector | 2024
Read our latest insights on A year in review : The Indian auto sector | 2024
-----------------------------------------------------------------------------
A year in review : The Indian auto sector | 2024
Mitt Siddhpura, Akhilesh Magal on E-mobility
January 17, 2025
As we close the chapter on 2024, India’s automotive sector reflects a dynamic narrative of challenges, resilience, and transformation. From post-COVID growth to a recent slowdown, shifting consumer preferences, and reduced EV subsidies, the industry reflects a mix of resilience and uncertainty.
With insights backed by data, charts, and expert analysis, we explore the journey of the auto sector from pre-pandemic highs to the uncertainties of today, and what 2025 and beyond might hold for the Indian economy’s critical pillar - the automotive industry.
Background
India's auto sector is a cornerstone of the country’s economic growth, significantly contributing to GDP, employment generation, and attracting Foreign Direct Investments (FDIs).
Urbanization, rising incomes, and infrastructure development are playing a pivotal role in the demand and growth of the auto sector. Further the movement of the auto market towards cars, especially SUVs suggest that cars are an important positional good i.e. something that people derive social standing from. Additionally, the transition to electric vehicles (EVs) is central to India's sustainability goals, supported by government initiatives like FAME and PLI schemes. Hence, monitoring the sector’s growth is key to understanding India's economic trajectory, global competitiveness and clean-tech innovation.
In this article, we delve into how the automotive sector has evolved over the years, focusing on its post-COVID recovery and outlook for 2025 and beyond.
Looking back | The growth journey - 2017 to 2024
During the pre-COVID era (2017–2020), India’s automotive industry experienced steady growth, driven by consistent demand and incremental sales across segments. However, the COVID-19 outbreak (2020–21) brought unprecedented challenges. While the pandemic was a global phenomenon, India’s economy faced a sharper impact due to stricter lockdown measures and mobility restrictions. This led to production halts, supply chain disruptions, and a significant decline in consumer demand.
The industry also witnessed a notable surge in automobile prices, driven by two key factors:
These factors collectively led to a 50% increase in Average Selling Price (ASP) of passenger vehicles from ₹7.6 lakh in FY19 to ₹11.5 lakh in FY24, prompting a shift in consumer preferences.
- A global shortage of critical automobile components, particularly semiconductors.
- The simultaneous implementation of BS-VI emission norms, which increased production costs.
View attachment 20430
Figure 1: Average Selling Price (ASP) of passenger vehicles
However, post COVID session (2021-2024) has witnessed pent-up demand, a strong recovery and rebound in sales despite the significant hike in automobile prices.
Figure 2: Vehicular category-wise sales | 2017-2024
While the industry observed a growing demand for premium and aspirational vehicles, sales of entry-level models struggled. During the first half of the FY22 compared to the same period in 2018–19, sales of passenger cars, including entry-level hatchbacks, declined by 24.7%, while utility vehicle sales surged by an impressive 111.6%. As reported in The Indian Express, cars priced above ₹10 lakh experienced a fivefold faster growth compared to those priced below ₹10 lakh.
This trend underscores the ongoing distress in the lower end of the auto segment, which has a cascading effect on the entry-level car market. Many consumers in this segment typically upgrade from two-wheelers, but the economic strain has limited their ability to do so. India, with a car ownership rate of just 7.5%, lags far behind other nations, reflecting its nascent automotive penetration.
Figure 3: Car ownership across various countries
View attachment 20432
Two-wheelers (2Ws) have been the back-bone of India’s auto-sector, remaining the most preferred mode of transportation for millions. In 2024, 2Ws constituted for ~78% of all vehicular sales.
Figure 4: Vehicular sales by category | 2024
View attachment 20433
Furthermore, 2Ws sales have shown significant progress with a double digit growth rate of 11% Year-on-Year (YoY) in 2024.
Figure 5: Two-wheeler sales | 2017-2024
However, a closer look at model-wise sales of two-wheelers reveals a notable trend similar to four-wheelers: the growing premiumization of vehicles. Between 2023 and 2024, premium two-wheelers outperformed mass-market commuter models, recording significantly higher growth rates as outlined in the figure below.
Figure 6: Two-wheeler vehicle segment growth rate FY2023-24
Moreover, while two-wheeler sales are still lower than the peak in 2019 in the pre-pandemic era, the four-wheeler sales have significantly increased by 30% in the same period.
Figure 7: Four-wheeler sales | 2017-2024
2024 | The beginning of a slowdown?
The post-pandemic recovery of the Indian automotive industry has been a story of resilience and growth, but 2024 marks the beginning of an industry-wide slowdown after two consecutive years of strong demand. While overall vehicle sales remained subdued for most of the year, October stood out as an exception due to the alignment of three major festivals—Navratri, Dhanteras, and Diwali—in the same month.
Figure 8: Vehicular category-wise monthly sales | 2024
Uncharacteristically, December—the month typically associated with end-of-year discounts and high sales—saw a decline in demand, disrupting historical trends. According to an Economic Times report, Indian car dealers recorded a surprising 2% drop in sales in December 2024, reflecting broader economic pressures.
| Vehicle Type | FY 2023–24 (units) | FY 2024–25 (units) | YoY Change |
|---|---|---|---|
| Total Vehicles | 4.50 million | 5.36 million | +19% |
| Passenger Vehicles | 0.672 million | 0.770 million | +15% |
| Utility Vehicles | 0.235 million | 0.362 million | +54% |
| Two-Wheelers | 3.458 million | 4.198 million | +21% |
| Three-Wheelers | 0.300 million | 0.307 million | +2% |
| Commercial Vehicles | 0.0658 million | 0.08099 million | +23% |
Summary Table: Q1 FY 2025–26 Export Performance| Vehicle Segment | Q1 2024 Exports | Q1 2025 Exports | YoY Change |
|---|---|---|---|
| Passenger Vehicles | ~180,483 | ~204,330 | +13% |
| Two‑Wheelers | 923,148 | 1,136,942 | +23% |
| Three‑Wheelers | ~72,000 | ~96,000 | +34% |
| Commercial Vehicles | ~15,780 | ~19,427 | +23% |
| Total Autos | ~1.193 million | ~1.457 million | +22% |
