Trends That Shaped the Auto Industry In 2023 Advances in technology and changing consumer desires pushed the Indian automotive industry to undergo a big change and come up with new solutions that met the evolving demands of customers
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Over the next decade, the automotive industry is likely to see some significant transformations at a global level. Principal transformations being the shift of growth in demand for automobiles from developed nations to developing nations. A relentless pursuit of economies of scale and scope in design and engineering of automobiles and components, while pursuing low-cost manufacturing destinations will fuel growth. Digital sales, sports utility vehicles (SUV), Bharat NCAP, growth of used vehicles and the high-tech use of technology has shaped the trajectory of the auto industry in 2023.
Rise of digital sales
The new-age customers look for transparency and convenience in vehicle purchase. Few original equipment manufacturers (OEMs) have successfully moved from traditional dealer-led sales model to an agency model, while few others are evaluating a hybrid model. are looking at digital platforms as an important channel. In one of Deloitte's recent automotive surveys (GACS), nearly 80 per cent of customers from India highlighted ease of use, convenience and speed as main reasons for going through a virtual process.
Launch of Bharat NCAP
It is expected that the demand for safer cars will increase, encouraging car manufacturers to comply with customer needs. With high safety standards, Indian cars will be able to compete better in the global market, increasing the export potential of car manufacturers in India. The concept of safety rating of passenger cars empowers consumers to make informed decisions. Nitin Gadkari, Union Minister of Road Transport and Highways launched Bharat New Car Assessment Programme (Bharat NCAP) in New Delhi aiming to enhance road safety by elevating vehicle safety standards for up to 3.5-tonne vehicles in India. Tata Motors' home-grown sports utility vehicles (SUV) Tata Safari and Tata Harrier have received the highest five-star ratings after being crash-tested under the Bharat-NCAP.
EV Dominance
Overall sales grew by a whopping 157 per cent, from 4,58,746 in FY2022 to 11,80,597 in FY2023. This was further encouraged with an increase in the number of models being offered in the electric two-wheeler and 4-wheeler brands ranging between the affordable and luxury segments. With the bulk of the EV sector being driven by sales of electric two-wheelers, India saw over 1 lakh EVs being sold every month in H2 FY 2023, MoRTH data shows. The top three players in this segment are Ola Electric, TVS Electric and Ather Energy despite the recent decrease in subsidy offered under the FAME 2 scheme.
Increased acceptance of used vehicles
The trend for pre-owned vehicles has been on the rise.The used car to new car ratio is currently at 1.4:1 and is likely to touch 2:1 in the next five years. This trend is driven by factors such as affordability, requirement for personal mobility post Covid and trust created by OEMs and other startups. Significant numbers of startups and OEMs have introduced solutions which increased adoption amongst consumers, for example, quick evaluation of vehicles, faster settlements, easy finance availability, service & warranty support.
SUV dominance
Due to increase in consumer spending, acceptance of higher ground clearance and introduction of sub-4m SUVs, the market is now dominated by SUV (>46 per cent of total PV sales). Most of the major OEMs are offering multiple products in this segment. According to experts, the key drivers of India's booming SUV market include changing consumer preferences, improved road conditions, more safety and comfort features, increased income levels, urbanisation and customisation options,
Use of tech
Auto companies are waltzing up to tech – the tango is picking up speed. Experts believe that the next decade represents one of the biggest tech disruptions in the automotive industry– CASE– connected, autonomous, shared and electric. The technology trends in the automotive industry among other industry verticals are more evident because it has evolved quite rapidly and is at the front of the digital era. The next-gen automobile ecosystem will include OEMs, software and service suppliers, systems integrators, device manufacturers, online players and telecom operators.
Focus on customer experience
New age buyers expect to have a smooth and hassle-free experience throughout the journey, be it purchase or aftersales, hence an increased focus from the OEMs on improving customer experience will sustain the growth. The growing prominence of new consumer segments is changing the way companies reach out and engage with these prospective buyers. Women, Tier IV customers and the increased use of smartphones are driving expectations.
