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India Passenger Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Published: | Mordor Intelligence Pvt Ltd | 70 Pages | Delivery time: 2-3 business days


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India Passenger Car Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)
Published: January 17, 2022
Mordor Intelligence Pvt Ltd
Content info: 70 Pages
Delivery time: 2-3 business days
  • Description
  • Table of Contents

The Indian passenger car market was valued at USD 30 billion in 2020, and it is expected to reach a value of USD 52 billion by 2026 while registering a CAGR of over 9% during the forecast period.

With the stringent social distancing norms and nationwide lockdown imposed, the production units of different OEMs were completely shut down, and the raw material transport was halted, directly or indirectly affecting thousands of dependent workers, and the entire industry stumbled. Although it was not a complete disaster for the market, Indian-origin manufacturers like Tata Motors and Mahindra lost a good market time just when their cars were picking pace in terms of safety and popularity.

Key Highlights

  • The Indian automotive industry has been experiencing steady growth in the demand for and sales of passenger cars, owing to economic improvement and the rise in the consumers' disposable incomes. The country has witnessed a gradual shift from transportation to comfortable/convenient transportation and from convenient transportation to luxurious and safe transportation.
  • Globalization and commercialization further helped to increase connectivity and broaden the overall automotive industry's presence and importance in the country.
  • The Indian automotive industry has shifted from just being a components manufacturer to an assembler and manufacturer of complete vehicles, including passenger cars.
  • India is also a major exporter of automotive parts, components, and assembled vehicles to countries in the Middle East and Asia, which is expected to continue to be a major contributor to the Indian automotive industry's revenue.
  • With the growing presence of international automobile manufacturers and brands in the country, and the consumers' ability to purchase new cars and maintain those, the consumers have been willing to buy more than one passenger car to suit their various daily needs and travel purposes.
  • Additionally, a consistent rise in population has been a major factor responsible for the rise in the automotive industry's revenue, both for commercial vehicles and passenger cars.
  • Furthermore, with the growing focus on improved fuel economy and reduced exhaust emissions, the demand for and sales of electric vehicles, especially electric cars, are expected to witness fast growth during the forecast period. However, inadequate charging infrastructure and the high cost of electric cars may hinder the growth of the market.

Key Market Trends

Growing Auto Component Industry

The Indian automotive component industry is expected to witness healthy growth during the forecast period, owing to increasing domestic demand, rising exports, and the increasing flow of investments in the automotive components sector. Thus, it makes India a key automotive components sourcing hub.

With Tata, an Indian-origin automotive manufacturer owning the Jaguar and Land Rover companies, the company is being able to migrate important technology to the Indian market. Tata Nexon has become one of the safest cars in the market with a 5 star Global NCAP safety rating. This has improved consumer confidence and, thus, sales of Tata Motors and has led the way to Tata Altroz and Harrier inspiring the consumers to buy the vehicles.

Mahindra, another Indian-origin automotive manufacturer, came up with XUV300, which is rated safest in its segment even over the Nexon of Tata. The safety rating achieved by XUV300 was 5 star NCAP rating, and this inspired confidence in the Indian market buyers to opt for Indian carmakers over other manufacturers. Although both Tata and Mahindra's market confidence of the consumer is in the nascent stage currently, the prospects look really good for the companies owing to the product quality being delivered.

Additionally, the National Government budget also announced an increase of 15% in customs duties on select auto parts. While this move has been made in line with the Make in India initiative, it can mean a disadvantage to vehicles that are assembled in India (brought in as Completely Knocked Down units).

It is estimated that the increase in auto component duties is unexpected in such a revival period with the pandemic still going on, which will increase the production cost, leading to higher costs for consumers.

Shift in Focus Toward Safer Passenger Vehicles and Toward Electric Vehicles

In order to boost the sales of electric cars, OEMs have been collaborating with battery technology suppliers to develop long-range cars. Additionally, in order to support electric cars' sales, the Indian government announced subsidies on the purchase of new electric cars. Currently, Mahindra & Mahindra and Tata offer electric vehicles in the Indian market. Maruti Suzuki is testing its first EV, the WagonR.

The Indian government announced its National Electric Mobility Mission Plan (NEMMP) to support the local manufacturing capabilities of the automakers. With this roadmap, the Government of India plans to make electric vehicles economically viable and self-sustaining by 2020. The government also announced over INR 13,000 crore investments for demand incentives, INR 1,800 crore for R&D investments, INR 5,000 crore for power infrastructure, and INR 1,200 crore for charging infrastructure.

This plan aims to encourage reliable, affordable, and efficient EVs that can meet the consumers' performance demand and price expectations. It involves the collaboration of government and the industry to promote and develop indigenous manufacturing capabilities, consumer awareness, technological advancements, and required infrastructure, thereby helping the country to emerge as a global leader in the electric two-wheeler four-wheeler market by 2022.

The government has decided to take a critical role in supporting the creation of demand and acceptability of EVs, spurring collaborative R&D efforts, and enabling required infrastructure to take its shape. The government has also decided to implement a robust EV demand-generating scheme, in terms of size and duration, to meet the objectives of bridging the gap in the acquisition price of EVs compared to the normal IC engine vehicles.

Competitive Landscape

Maruti Suzuki led the Indian passenger car market in 2020 in the hatchback, sedan, and SUV and MUV segments. Mahindra registered the highest sales in SUVs, after Suzuki, whereas Hyundai led the hatchback and sedan segments, after Suzuki. MSIL started upgrading the engines of its most-sold vehicles that are compatible with BS6 norms, and Baleno was the first model launched in April 2019. The most sold MPV by MSIL, Ertiga, may also get a BS6 upgrade in the second half of 2019.

Hyundai, Mahindra & Mahindra, Honda, Toyota, and Ford India have added new passenger cars to their product line-up. Tata is set to dominate the Indian MPV and SUV market with their Harrier and re-introducing Safari based on Harrier's build platform. Tata Altroz has taken a fair share of the market in the Hatchback sector, gaining a lot of buyers owing to Tata's build quality, safety, and reliability.

Additional Benefits:

  • The market estimate (ME) sheet in Excel format
  • 3 months of analyst support
Product Code: 61373



  • 1.1 Study Assumptions
  • 1.2 Scope of the Study




  • 4.1 Market Drivers
  • 4.2 Market Restraints
  • 4.3 Porter's Five Forces Analysis
    • 4.3.1 Threat of New Entrants
    • 4.3.2 Bargaining Power of Buyers/Consumers
    • 4.3.3 Bargaining Power of Suppliers
    • 4.3.4 Threat of Substitute Products
    • 4.3.5 Intensity of Competitive Rivalry


  • 5.1 Vehicle Type
    • 5.1.1 Hatchback
    • 5.1.2 Sedan
    • 5.1.3 SUV and MUV
  • 5.2 Fuel Type
    • 5.2.1 Petrol
    • 5.2.2 Diesel
    • 5.2.3 Other Fuel Types


  • 6.1 Vendor Market Share
  • 6.2 Company Profiles*
    • 6.2.1 Mahindra & Mahindra Ltd
    • 6.2.2 Tata Motors Ltd
    • 6.2.3 Honda Cars India Ltd
    • 6.2.4 Toyota Kirloskar Motor Pvt. Ltd
    • 6.2.5 Volkswagen India Pvt. Ltd
    • 6.2.6 Maruti Suzuki India Limited
    • 6.2.7 Nissan Motor India Pvt. Ltd
    • 6.2.8 Skoda Auto India Pvt. Ltd
    • 6.2.9 Ford Motors India
    • 6.2.10 Kia Motors Corporation
    • 6.2.11 Hyundai Motor India Ltd