Automobile industry comprises of passenger cars, commercial vehicles, two-wheelers
and three wheelers. Two-wheelers and passenger cars dominate the market in India and in passenger car segment mid-size cars and small-sized cars. Two wheelers comprised of about 81% and passenger cars about 13% of the total sales in FY19. The automobile industry is very crucial because it is about 7.1% of the country’s GDP. Also, it is expected that India will be the third largest market for passenger vehicles in the world by 2021. India’s automobile industry is facing a slow down right now with industry sales has fallen by about 31% in comparison to the sales the previous year. This may be due to factor listed below: STRICTER LENDING GUIDELINES: with slowing economic growth banks have changed their lending policies. Also, because of recent cases of failures of NBFCs, it has become difficult to get loans. TRANSITION TO BS6: India has stricter regulations to change the configuration of the vehicle’s engine to comply with BS6 norms, skipping BS5, this is forcing people to wait for the new vehicles to launch as it is compulsory from 1st April, 2019 to sell on BS6 compliance vehicles only. RISE IN SHARING CAB SERVICES: with increasing and cheaper service of cab sharing by various companies like Uber, Ola etc. reduces the need of personal vehicles. INDIA IS HASTING TOWARDS EVs: government’s regulations to electrify all the vehicles till 2030 and two wheelers less than 150cc to get fully electric by 2023. So, people are holding on to their current vehicles so that they don’t have to take new EV in the way. Overcrowding: with so many cars on the road people are avoiding buying cars and using public transport more. The market leaders in each segment of the sector in the country are: Maruti Suzuki in passenger cars with about 50% share in the market. Tata Motors having around 44% share in the commercial vehicles segment. Hero moto corp. and Honda have cumulative share of about 67% in the two- wheeler segment. Bajaj and Piaggio having a cumulative market share of about 76% in three- wheeler segment. So, talking about the market structure, though, each segment has number of players manufacturing differentiated products but still the market follows oligopoly type of market structure because two or three major players in the market have more than 50% of market share. Although, the industry is facing falling sales but India has some factors that can make the sector grow in future, like, rising income and shifting demographic towards the youth, improving infra, higher FDI, improving and increasing R&D in the country etc.