Auto Industry in India - We had a chequered Past, can we expect a bright future?

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EV 4 Wheelers-New EV policy for Cars In India- Quo Vadis ?

After 6 months of New EV policy on cars- it did not attract the attention of Global players.

Tesla is gone at least for now.- not interested in coming to India. BMW joins a growing list of Global companies that have refused to participate under the new EV policy, which was announced by the govt in mid-March with much fanfare, mainly to attract other multinational companies like Hyundai and sibling Kia, Mercedes-Benz, Volvo, Toyota, Honda Cars, JLR and the Stellantis group.

What are the incentives offered ? what do these Global giants comment on these incentives? Please read these articles … Very interesting… Is Indian Govt doing something ?.

Now , coming to existing domestic EV car players , there seems to be intense lobbying against each other till date …Maruti Suzuki & Toyota say Hybrid car is the best option for India while Tata & Mahindra are in favour of EV… Both EV of Tata and Mahindra are best sellers where as Maruti Toyota are not leaving behind in selling the Hybrid cars with flexi fuel blends in equal numbers even without govt incentive like EV.

But when the question of inviting new international EV players like Tesla , BMW, Mercedes arises , all the 4 domestic players join hands to lobby against the new EV policy…

This is clear , each company has its own business interest.

So far now , it is all these 4 companies will fight for a pie in 4 wheeler car market.
But the only signal that EV 4 wheeler sales have come down partly because of withdrawal of FAME 2 subsidy and inadequate charging infra and there is seasonal factors.

Who are the EV car leaders in India ?.
The top 3 players in EV cars are Tata motors (61% market share) , MG Motors (16% Market share), M & M (7%)

M & M has some interesting products in SUV range which is high in demand and the company is ramping up production. It has the fastest growing products.- seems unstoppable and unbeatable. please read the article to find more.

Going forward , it is going to be tough for existing EV players and fittest will survive with multi products- petrol/ hybrids / CNG/EV , product reliability , service infra .

We have to see what the govt is planning to promote EV 4 wheelers…EV policy 2 is coming up !

Discl,: Remain invested in Mahindra & Mahindra , Maruti Suzuki, Tata motors from.lower level Not a buy sell recommendation.please do your own assessment before buy sell decision.

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Tesla launches autonomous robotaxis and humonoid robots Optimus. Massive implications.

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EV sales by model

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EV- 2 wheelers Sales bounces back in October with 85% growth over YOY.

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Insightful discussion on the auto sector, which stands at a crucial juncture today

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Can GST 2.0 revive the ailing auto industry?

The answer is yes, to a great extent…subject to the govt expediting the other initiatives which they have started.

India permits 100% FDI in its automotive sector through the automatic route, encouraging substantial foreign investment in manufacturing, including passenger cars, two-wheelers, and increasingly, electric vehicles (EVs). Significant investments have been made by major players like Hyundai, Toyota, and Mercedes-Benz, with the policy framework and government initiatives like FAME aiming to make India a global automotive manufacturing hub.

The other areas which the Govt has already initiated are PLI schemes for Auto and auto components , incentives for exports, to build robust local and global supply chain , Rare earth elements, semiconductors , EMS, improving infrastructure.

So , failure is the pillar of success.

In India during last 45 years, churning in Auto industry continues with entry of Global auto giants. Some succeeds , many fails and others are still struggling.

During last couple of months, Iveco- an Italian CV manufacturer in India gets sold to Tata Motors and Isuzu- Japanese CV maker in India gets sold to Mahindra & Mahindra.

In 1980’s ..4 Japanes LCV manufactures failed in India .. DCM-Toyota , swaraj-maza , Eicher- Mitsubishi, allwyn Nissan..

In cars , Very recently , Ford failed in India.
Ford wasn’t the only brand to fail in India.
Others who failed were Dawoo, Opel ,Fiat ,
Peugeot
Many European car makers are struggling to survive in India, though Koreans , Japanese , chinese succed after initial struggle.
Why ? Please read the link below.

There are many reasons but apart from taxation , the other reasons are

Foreign automakers have sold stakes or exited operations in India not because of a lack of opportunity, but due to challenges in the Indian market like price-sensitive consumers, complex regulations and taxes, and intense competition from local players like Maruti Suzuki, Tata, Mahindra Leyland.

The foreign companies struggle to meet the demand for affordable, low-cost vehicles that are popular in India, leading to dismal sales and eventual withdrawal or sale of their Indian operations to Indian companies.
Here’s a breakdown of the key factors:

Price-Sensitive Consumers

The Indian market primarily demands low-cost, high-value vehicles, an area where companies like Tata, Maruti Suzuki, Mahindra and Hyundai have a strong foothold with products tailored to these needs.

Competition and Market Share

Other global automakers have struggled to compete against established players like Maruti Suzuki and Hyundai,Tata Motors, Mahindra , Leyland who offer locally relevant products and a large customer base with well established wife after Sales service network

Regulatory and Tax Hurdles

Navigating India’s complex tax structure, high duties, and various regulations adds significant cost and complexity to operations, making it difficult for foreign companies to be profitable.

#Affordability vs. Global Standards
To offer vehicles at Indian price points, foreign companies would have to compromise on global quality and safety standards, which could damage their brand reputation and brand value.

Lack of Demand for Global Products

The type of cars and segments popular in Western markets do not always align with Indian consumer needs, leading to poor demand for their offerings.

Focus on Primary Markets

As the automotive industry global shifts to electric vehicles, many foreign manufacturers are focusing resources on their primary markets, leading to divestments in markets like India where they couldn’t achieve significant success.

Discl: This write up is only for learning purpose. Not a buy or sell recommendation for any stocks