Challenges and Objectives of Automobile Industry in India

In recent years, the automobile industry in India has faced numerous challenges. These range from challenges like the COVID-19 to consumer sentiment, technical collaboration, and JVs. To overcome these challenges, it is important that the industry work in a cooperative manner. Here are some key points for consideration in this regard.


A number of automobile companies in India prefer joint venture (JV) strategy to expand their business. They do so to get access to more resources and share risks. In addition, JVs also give firms an opportunity to enter new markets. The benefits of such a joint venture may vary depending on the JV model.

One of the most successful JVs is the Maruti-Suzuki joint venture. Established in 1981, the Maruti-Suzuki JV has been an effective driver of growth in the auto industry in India. It helped the company survive rival threats and entered the lucrative auto market.

Another notable JV in the country is the Hero Honda Motors Ltd. set up in 1984. This venture has pioneered fuel saving vehicles. Several investors have gained multifold growth from this venture.

The automotive industry in India is expected to expand to 8-10 million cars by 2025. This will require companies to pool their resources to meet the rising demands. To facilitate the process, the government has announced a number of reforms. These include the PLI Scheme.

Technical collaboration

The automobile industry in India has witnessed a lot of developments over the years. After the liberalization of markets, the industry flourished. It is the country’s largest manufacturer of two-wheelers, three-wheelers, and commercial vehicles.

Despite the rapid development, the auto industry is facing a serious challenge. Adapting to the dynamic market conditions will be critical. Therefore, auto OEMs need to develop a systematic approach to collaborations with technology partners.

Collaborative technologies can help automotive companies enhance product design, reduce supply chain inefficiencies, and transform traditional production inefficiencies. However, automakers will need to develop trust in order to implement effective collaborations.

To foster an ecosystem, collaborative technology providers must interact closely with automakers. This includes a thorough understanding of the automakers’ roadmap and the gaps that they see with customer expectations. These collaborations will ultimately help them to develop technologies faster.

Automakers need to collaborate with technology providers to develop low-cost prototypes. This will ensure that the winners are the ones who can build low-cost products.

Consumer sentiment

Consumer sentiment of automobile industry in India has been declining over the past two years. A recent survey suggests that consumers may not be able to afford to buy a new car. Some of the key reasons include the rise in cost of living and a lack of savings.

The auto industry is facing a transition. Most of the major car manufacturers are experiencing a staggered demand new casino. In addition, the onset of the Corona virus pandemic had a significant impact on the sector.

The study also found that more than 40% of Indian Purchase intenders would be more inclined to buy a new vehicle rather than a used one. Moreover, 40% of respondents were impressed by the safety of a new vehicle.

While the study did not provide a consumer data benchmark, it is opportune to understand the market’s underlying sentiments. According to the survey, three in ten urban Indians are looking to buy a new vehicle this year. However, more than a fifth are holding off making their purchase for at least four months.

COVID-19 challenges

The COVID-19 pandemic has sparked many challenges in the automobile industry in India. These challenges include a disruption of supply chain networks and a slowing in demand. As a result, automakers have been struggling to meet customer requirements.

In the last six months, 8% to 10% of auto dealers have closed their businesses. This is expected to continue. Automakers have also offered discounts to attract buyers.

Moreover, there has been a slowdown in discretionary spending. This has contributed to the decline in auto sales. However, studies show that consumer sentiment is returning. Therefore, automotive manufacturers should continue to expand their production. They should also invest in big data analysis and machine learning tools to better monitor their manufacturing processes.

Nevertheless, there are several challenges that will continue to plague the Indian automobile industry. Some of these issues include the slowing of customer demand, a reduction in employee demands, and an interruption in supply chains.

One of the key issues is the cost of ownership. A vehicle’s upfront cost accounts for about 20 to 25 percent of a buyer’s lifetime costs. Other components of the lifetime cost are financing transactions, fuel, and service. Automotive suppliers should focus on reducing these expenses while diversifying their portfolios.

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