Automobile Sector: Poised For Rapid Acceleration

In the post-pandemic rebound, shares of major automobile companies are outperforming the benchmark indices as the sector is expecting another month of robust car and commercial vehicle sales. Also, the increasing demand for electric vehicles will further boost the sector. In this article, Shreya Chaware has thrown some light on the key points underpinning the growth of the automobile sector.

- Shreya Chaware

India’s annual production of automobiles in FY21 was 22.65 million vehicles and 13 million vehicles were produced between April-October 2021. The two-wheeler segment dominates the market in terms of volume owing to a growing middle class and a huge percentage of India’s population being young. Moreover, the increasing inclination of the companies in exploring the rural markets further aided the growth of the sector. The automobile industry can be said as one of the biggest strengths of the country with a turnover of ₹7.5 lakh crore, exports of ₹3.5 lakh crore, a GDP contribution of 7.1 per cent, and a manufacturing GDP of 49 per cent.

It also offers an employment scope for over 4.5 crore people. India holds a strong position in the international heavy vehicle space as it is the largest tractor manufacturer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. India is also a prominent automobile exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India and major automobile players in the Indian market are expected to make India one of the leaders in the two-wheeler and four-wheeler markets in the future.

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