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The automobile sector in India is one of the main contributors to the economy, contributing to about 7.1% of the GDP and providing employment to over 19 million people. The industry has witnessed a remarkable recovery from the pandemic-induced slowdown in 2020-21 and is expected to grow at a moderate pace in 2024. In this article, we will look at the key expectations and trends for the automobile sector in India in 2024, covering the segments of tractors, trucks, buses, three-wheelers, electric vehicles, and tyres.
Various factors, such as rising income levels, urbanization, infrastructure development, availability of finance, government policies, and consumer preferences, drive the demand for automobiles in India.
Some of the key drivers for the automobile sector in 2024 are:
However, the automobile sector in India also faces some below-given challenges:
The automobile sector in India comprises various segments, such as passenger vehicles, commercial vehicles, two-wheelers, three-wheelers, tractors, electric vehicles, and tyres. Each segment has its dynamics and prospects for the year 2024. Here is a brief overview of each segment:
However, the growth could be moderated by the high base effect, rising fuel prices, and the semiconductor shortage. The segment is expected to see a shift in the consumer preference towards the utility vehicles, which offer more space, comfort, and features. The segment is also likely to notice an increase in the share of electric vehicles, which are becoming more affordable and accessible, due to the FAME II scheme & introduction of new models by the leading players.
However, the growth could be constrained by the rising fuel prices, the shortage of drivers, and the competition from the railways and waterways. The segment is expected to see a shift in consumer preference towards higher tonnage and fuel-efficient vehicles, which offer more payload and lower operating costs. The segment is also likely to notice an increase in the share of electric vehicles, especially in the bus and light commercial vehicle segments, which are suitable for urban and inter-city transportation.
However, the growth could be limited by the rising cost of ownership, the competition from the electric two-wheelers, and the uncertainty of the pandemic. The segment is expected to see a shift in consumer preference towards premium and performance-oriented motorcycles, which offer more features and styles. The segment is also likely to notice an increase in the share of electric two-wheelers, which are becoming more popular and viable, thanks to the FAME II scheme and the launch of new models by established and new players.
However, the growth could be hampered by the rising fuel prices, the competition from the four-wheeler and two-wheeler segments, and the uncertainty of the pandemic. The segment is expected to see a shift in consumer preference towards electric three-wheelers, which offer lower operating costs and environmental benefits. The segment is also likely to notice an increase in the share of electric three-wheelers, which are dominating the market, thanks to the FAME II scheme and the presence of several players.
However, the growth could be moderated by the high base effect, the rising cost of raw materials, and the uncertainty of the pandemic. The segment is expected to see a shift in consumer preference towards higher horsepower and technologically advanced tractors, which offer more productivity and efficiency. The segment is also likely to notice an increase in the share of electric tractors, which are emerging as a new and sustainable option for farmers.
However, the growth could be challenged by the shortage of semiconductors, the lack of consumer awareness, range anxiety, and the uncertainty of the pandemic. The segment is expected to see a shift in consumer preference towards electric two-wheelers and electric three-wheelers, which account for the majority of EV sales in India. The segment is also expected to see an increase in the share of electric passenger vehicles and electric commercial vehicles, which are becoming more competitive and attractive, thanks to the innovation and investment by the leading players.
However, the growth could be affected by the rising cost of raw materials, the competition from imports, and the uncertainty of the pandemic. The segment is expected to see a shift in consumer preference towards radial and tubeless tyres, which offer better performance and durability. The segment is also likely to notice an increase in the share of electric vehicle tyres, which suit the specific needs and characteristics of electric vehicles.
The automobile sector in India is transforming as it adapts to the changing market conditions, consumer preferences, and regulatory environment. The industry is expected to witness moderate growth in 2024 as it recovers from the impact of the pandemic and leverages the opportunities offered by government policies and technological advancements.
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