Indian Automobile Industry: In-Depth Research Report (2025)
1. INDUSTRY OVERVIEW
Market Size and Growth
India’s automobile industry was valued at approximately USD 118.9 billion in 2024 and is projected to reach USD 276.5 billion by 2034, growing at a CAGR of 8.8%. In FY24, India produced 5.16 million vehicles, with this number expected to increase to 8.36 million units by FY30. India is currently the fourth-largest auto market globally and contributes ~7.1% to the country’s GDP. The sector employs over 37 million people directly and indirectly.
Market Segmentation
- Two-Wheelers (2W): Dominates the Indian auto market with ~18 million units sold in FY24.
- Three-Wheelers (3W): Sold ~692,000 units in FY24, largely driven by last-mile connectivity and EV adoption.
- Passenger Vehicles (PV): Registered sales of ~4.22 million units, with SUVs contributing more than 50% of PV sales.
- Commercial Vehicles (CV): Sold ~968,000 units, of which LCVs comprised ~595,000.
- Electric Vehicles (EVs): Nascent but rapidly growing; <2% of total vehicle sales currently, but projected to account for ~30% by 2030.
2. KEY PLAYERS IN THE INDUSTRY
Public & Listed Companies
- Maruti Suzuki India Ltd
- Market Share: ~45% in PV segment
- FY25 Revenue: INR 1.53 lakh crore
- Net Profit: INR 13,209 crore
- Focus: Expanding SUV lineup, rural markets, and exports
- Tata Motors Ltd
- Revenue: INR 4.39 lakh crore (includes JLR)
- Leader in EV segment (49% of EV 4W sales)
- Focus: Electrification, premium SUVs, international markets
- Mahindra & Mahindra Ltd (M&M)
- Dominates SUV and CUV segment
- Aggressively expanding EV capabilities (Born Electric platform)
- Ashok Leyland
- Strong in commercial vehicle space
- Focus on modular platforms and alternative fuels
- Bajaj Auto
- Leader in 2W and 3W segments
- Export-focused and expanding electric portfolio
Major Private Players
- Ola Electric: EV scooters, battery innovation, charging infra
- Ather Energy: High-performance e-scooters
- TVS Motor Company: Rapid growth in EV and performance 2Ws
3. FINANCIAL PROFILE & RATIOS
Key Metrics
| Company | EBITDA Margin | ROCE | D/E Ratio | Inventory Turnover | Current Ratio |
|---|---|---|---|---|---|
| Maruti Suzuki | 12-13% | 21.8% | ~0.0 | ~1.7x | 0.77–0.87 |
| Tata Motors | 14.4% (Q1 FY24) | 16.2% | ~0.6 | ~2.0x (est.) | 1.2 (est.) |
Trends
- Industry is capital-intensive with large CAPEX for R&D and new model launches.
- Inventory levels vary by segment; PV and CV segments maintain lower turnover than 2W/3W.
4. GROWTH DRIVERS
Electric Vehicles
Government’s FAME II and PLI schemes are pushing OEMs toward faster electrification. Over 25,000 public EV chargers are now operational in India. Players like Tata, Mahindra, Ola, and Ather are building domestic battery and EV production capabilities.
Technology Integration
Connected vehicles, ADAS, AI-enabled infotainment, over-the-air (OTA) updates, and digital twins are being adopted widely. Tata Motors and M&M are investing heavily in smart tech for premium models.
Export Opportunities
OEMs are focusing on emerging markets in Africa, Latin America, and Southeast Asia. Bajaj Auto, TVS, and Ashok Leyland are leading exporters.
Policy & Infrastructure
- PLI scheme for automobile and auto components: INR 25,938 crore
- Vehicle Scrappage Policy: Drives replacement demand
- Gati Shakti and National Logistics Policy boost CV demand
5. RISK FACTORS
- Raw Material Volatility: Steel, aluminum, rare-earth elements, and lithium price volatility affect margins.
- EV Disruption: Legacy OEMs face competition from EV-first startups and tech players.
- Policy Uncertainty: Tax reforms, safety regulations, and emission norms create compliance risk.
- Demand Cyclicality: Auto demand is sensitive to interest rates, fuel prices, and macroeconomic factors.
- Global Supply Chain Disruptions: Semiconductor shortages and dependency on China for rare earths.
6. VALUATION TRENDS
| Company | P/E (TTM) | EV/EBITDA | Price/Sales | Remarks |
| Maruti Suzuki | ~27x | ~23x | ~2.8x | Premium valuation for quality |
| Tata Motors | ~18x | ~14x | ~1.1x | Discounted due to JLR drag |
| M&M | ~21x | ~15x | ~1.6x | Growth via SUVs & EVs |
Valuation multiples vary widely based on segment (mass market vs. premium, ICE vs. EV) and growth potential.
7. INDUSTRY TIMELINE: PAST → PRESENT → FUTURE
Past (Pre-2000s to 2010)
- Maruti dominated hatchbacks; limited competition
- Low-tech CVs and 2Ws ruled the market
Present (2011–2025)
- SUV boom, EV pilot programs, export push
- Entry of global players (Kia, MG, Toyota ramp-up)
- High digitization and new-age retail models
Future (2025–2030)
- 30%+ EV penetration
- India as a manufacturing hub for the world
- Digital-first vehicle sales and autonomous pilots
- Higher focus on sustainability and green tech
8. KEY TERMS & CONCEPTS
- FAME II – Faster Adoption and Manufacturing of EVs
- PLI Scheme – Production-linked incentives for manufacturing
- Inventory Turnover – Cost of goods sold / Avg. Inventory
- CAPEX – Capital expenditure on plants, tech, etc.
- ROCE/ROE – Key profitability metrics
- EV/EBITDA – Valuation multiple used for capital-intensive businesses
- Vehicle Platform Strategy – Modular vehicle design across models
9. COMPANY-SPECIFIC EXCELLENCE
Maruti Suzuki
- Industry leader in cost efficiency and distribution
- High ROCE and near-zero debt model
Tata Motors
- Pioneering EV space and winning SUV designs
- Strong JLR synergy and premiumization strategy
M&M
- Aggressive SUV rollout, solid rural market play
- Focus on profitability and EV ecosystem
Ashok Leyland
- Modular vehicle architecture and export-led growth
- Hydrogen ICE and CNG investments
Bajaj Auto
- Global presence in 3W and performance bikes
- Early mover in electric 2W space
Ola Electric
- Full-stack EV ecosystem vision (battery to retail)
- Challenges in scaling but strong branding
Date: June 2025