Automotive Industry Outlook for 2023

Companies like Tecnova can help organizations successfully enter and expand in the Indian market. For over 38 years, this firm has helped more than 1700 clients achieve their business goals. It provides collaborative and tailor-made solutions to organizations that wish to set their footprint in the automotive industry of India.

Like many other industries, the automotive industry has changed significantly since yesteryears. Updates in technology, market trends, consumer behavior, and disruptions in operations and supply chains on a global scale have led automobile makers to use innovation and technology to meet these new challenges.

Thus, firms planning to enter this market segment must have a clear insight into the outlook for the automotive industry for 2023 before making any decision.

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Automotive Industry: Global Outlook

Currently, the energy crisis, gas shortages, rising inflation and Federal Reserve rates, labor shortages, high consumer demand, and unpredictability in the supply chain are some of the handicaps being faced by the automotive industry. However, the rising demand for electric vehicles (EVs) is something to look out for.

According to a study, the market share for electric vehicles is on its way to rise to 54% by 2035. Moreover, sales of automobiles on digital platforms, integration of wireless technology in cars, and entry of connected and autopilot-enabled vehicles in the market are some of the factors that are going to fuel the growth of the automotive industry.

Now, to take advantage of such an opportunity, companies need to make major changes in their business models. They need to devote a part of their operations to EVs, partner with other organizations for electric vehicle technologies, strategic acquisitions, etc.

In the case of firms that supply parts or create technologies for fossil fuel-powered cars and/or EVs, the best plan of action is to efficiently invest in automation and re-evaluate their supply chain.

Furthermore, businesses can also plan to expand their operations in countries where there is the significant growth potential for the EV segment of the automotive industry.

Focusing on India’s Automotive Industry for 2023

As per a report, the automotive industry in India is set to expand at a compound annual growth rate (CAGR) of 11.3% till 2027. This growth will most likely occur due to factors like rising disposable income, wide availability of credit and financing options, and growth of population. Furthermore, with the growth of the passenger transport sector and the rise in demand for commercial vehicles, the potential for future growth of India’s automotive sector is pretty high.

Apart from this, industry-friendly policies and initiatives by the Indian Government will also play a major role in fuelling this development in the years to come.

Most importantly, the demand for electric vehicles has started to grow in India. Currently, the market share of EVs in India’s automotive sector is standing at 0.7%; however, by 2027, this figure is set to reach 3.8%. Companies who wish to reap the benefits of this emerging market, must create the infrastructure needed for manufacturing and operating these vehicles and develop new supply chains.

Furthermore, to make EVs a popular option among Indian users, businesses need to take a collaborative approach with the Indian government. They need to develop hybrid vehicles running on both petrol and electricity in order to assist consumers in slowly shifting to a fully electric model.

Apart from this, given the diverse consumer needs of the Indian population, there have to be multiple models of EVs each catering to a specific consumer class.

Companies can also use digital platforms to enable customers to book vehicles online. This can be beneficial as people nowadays like to pre-book cars and other means of transport even before their release. Businesses can use this consumer behavior to efficiently assess the demand and thereby plan better rollouts.

Major Challenges Being faced by the indian automotive Industry

What Changes Can Businesses Expect in 2023?

According to reports, by 2023, the global automotive industry is set to hit USD 2.5 trillion. Increasing demand for vehicles in the transportation, commercial, and tourism sectors will be the key reason behind this growth. Moreover, changing consumer trends, the introduction of sustainable policies by governments, the emergence of new markets, and the development of new technologies will also play a huge role in fuelling this growth.

However, despite these setbacks, automobile manufacturers should take note of the comeback of this market sector in the post-pandemic period. In spite of a shortage in supply for semiconductors and supply chain constraints, the passenger vehicle segment has achieved record sales. The commercial and two-wheeler segments have also experienced massive growth this year.

When it comes to electric vehicles, there will be a massive rise in their demand. Experts predict this demand chiefly in the two-wheelers segment. By 2027, there may be an estimated 9.1 million electric vehicles on the road.  Furthermore, companies will also have the option to invest in segments like component manufacturing, mobility services, battery management, etc.

In the immediate future, India’s automobile industry is on its way to adopting cleaner technology to reduce emissions. The government is set to implement the second phase of BS VI emission norms from April 2023; this may increase the cost of manufacturing gas-powered vehicles considerably.

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How can Businesses prepare for the Changes?

The Indian automotive industry has many opportunities for vehicle manufacturers, making it a viable option for business expansion.

However, for foreign companies, entering India’s automobile sector is not an easy task. Firstly, this nation has an elaborate legal system. Thus, organizations might have to face a lot of challenges in order to obtain licenses and approvals for starting their business.

Moreover, there are numerous tax laws that come into effect depending on a company’s turnover. It can take years to understand the intricacies of the Indian market. This can slow down their expansion plans in this country.

To do away with all such hassles, organizations can partner with consultant management firms.

Companies like Tecnova can help organizations successfully enter and expand in the Indian market. For over 38 years, this firm has helped more than 1700 clients achieve their business goals. It provides collaborative and tailor-made solutions to organizations that wish to set their footprint in the automotive industry of India.

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