India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. India’s automobile sector is split into four segments, i.e., two-wheelers, three-wheelers, passenger vehicles, and commercial vehicles, each having a few market leaders. Two-wheelers and passenger vehicles dominate the domestic demand.
In terms of market size, the Indian passenger car market was valued at US$ 32.70 billion in FY21, and it is expected to reach a value of US$ 54.84 billion by FY27 while registering a CAGR of over 9% between 2022-27. The global EV market was estimated at approximately US$ 250 billion in FY21 and by FY28 it is projected to grow by 5 times to US$ 1,318 billion.
India's electric vehicle market is anticipated to expand at a CAGR of 28.52% to attain Rs. 1,54,896 crore (US$ 18.32 billion) by CY29 from Rs. 44,135 crore (US$ 5.22 billion) in CY24.
India has a strong market in terms of domestic demand and exports. In March 2025, the total production of passenger vehicles*, three-wheelers, two-wheelers, and quadricycles was 24,76,915 units.
During FY25, the total production of passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles was 3,10,34,174 units.
India accomplished a significant milestone, with the sale of more than 20 lakh Electric Vehicles in FY25.
Automobile exports from India surged by 19% to over 5.3 million units in the FY25, driven by strong demand for passenger vehicles, two-wheelers, and commercial vehicles in international markets.
Two-wheelers and passenger vehicles dominate the domestic Indian auto market. Two-wheelers and passenger cars accounted for 76.57% and 16.80% of market shares, respectively, In FY25. Passenger car sales are dominated by small and midsized cars.
India has ample growth potential for the automobile industry considering that the car ownership in India lags significantly behind developed regions like the US, China, and Europe, where 80-90% of the population owns a car, compared to only around 8% in India. Foreign companies such as Kia Motors and Volkswagen have adapted themselves to cater to the large Indian middle-class population by dropping their traditional structure and designs. This has allowed them to compete directly with domestic firms, making the sector highly competitive.
A report by India Energy Storage Alliance estimated that the EV market in India is likely to increase at a CAGR of 36% until 2026. In addition, the projection for the EV battery market is forecast to expand at a CAGR of 30% during the same period.
There have been plenty of investments in the automobile sector recently, as the Government of India expects the automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023. India is on track to become the largest EV market by 2030, with a total investment opportunity of more than US$ 200 billion over the next 8-10 years.
Under phase-II of FAME India Scheme, subsidy amounting to US$ 696.8 million (Rs. 5790 crores) has been awarded to EV manufacturers on sale of 13,41,459 number of electric vehicles till January 31, 2024.
The automobile sector received a cumulative equity FDI inflow of about Rs. 2,45,771 crore (US$ 37.52) billion between April 2000 - December 2024.
The electric three-wheeler segment achieved record sales of 6,99,073 units in FY25, representing 57% of the 1.22 million three-wheelers sold, with Mahindra Last Mile Mobility leading the market at a 10% share.
The Ministry of Heavy Industries has launched FAME- III Scheme, with a budget of Rs. 10,900 crore (US$ 1.29 billion) to promote electric mobility and reduce reliance on fossil fuels over a two-year period from April 1, 2024, to March 31, 2026.
On April 17, 2025, Tata Motors announced that it had filed a record 250 patents and 148 design applications in FY25, its highest ever in a single year.
In March 2025, company has announced a significant investment of Rs. 7,410 crore (US$ 864 million) to establish a third manufacturing facility in Haryana. This strategic expansion is projected to elevate the region's production capacity to 7,50,000 units annually by 2029.
Mahindra & Mahindra Ltd plans to invest Rs. 26,000 crore (US$ 3 billion) in its automotive business over 2027, with Rs. 12,000 crore (US$ 1.42 billion) allocated specifically for its electric vehicle unit.
Hero MotoCorp is set to invest up to Rs. 525 crore (US$ 62 million) in Euler Motors, marking its entry into the electric three-wheeler market. This strategic move aims to establish Hero MotoCorp in the fast-growing electric vehicle sector.
On February 2025, TVS Motor Company announced a Rs. 2,000 crore (US$ 236.6 million) investment in Karnataka over the next five years to enhance its presence in the state through new infrastructure and expanded capabilities.
In December 2024, Mercedes-Benz sold 1,468 luxury cars, the highest in the segment, which gave it a market share of 0.50%. BMW sold 1,302 cars in December 2024.
Honda Motor Japan has announced plans to establish a dedicated electric motorcycle production facility in India by 2028. The new plant will be operational by 2028 and is expected to produce a wide variety of electric two-wheelers by combining modules common to multiple models, aiming to reduce costs and increase efficiency.
In January 2025, Force Motors Ltd announced securing an order to supply 2,429 ambulances to Uttar Pradesh's Health Department, enhancing the region's medical services.
In October 2024, Tata Passenger Electric Mobility, a subsidiary of Tata Motors Limited and pioneer of India’s EV revolution (TPEM), along with the Rajasthan Solar Association (RSA), has entered a Memorandum of Understanding (MoU) to promote electric vehicles (EVs) and the use of solar energy for EV charging in Rajasthan.
In May 2024, Maruti Suzuki India Limited (MSIL) announced the signing of a Memorandum of Understanding (MoU) with DBS Bank India Limited for dealer inventory funding.
In April 2024, Tata Motors, has signed a Memorandum of Understanding (MoU) with South Indian Bank to offer convenient financing solutions to its commercial vehicle customers and dealerships.
In January 2024, Renault India joins with Bajaj Finance to offer financing solutions to its customers with the introduction of Flexi Pay Scheme, digital-first experience, including up to 100% on-road funding, with turnaround time of 30 minutes.
In January 2024, BMW sold 1,340 luxury cars, the highest in the segment, which gave it a market share of 0.34%. Mercedes-Benz sold 1,333 cars in January 2024.
Ola Electric IPO to be the first auto company in India to launch an IPO in over two decades (20 years). It has an expected size of US$ 1.01 billion (Rs. 8,500 crore).
In January 2024, VinFast and Tamil Nadu Govt. signed a MoU to invest US$ 2 billion for an EV project in Thoothukudi, with US$ 500 million committed for the first phase, targeting 150,000 units annually.
In January 2024, Hyundai Motor India Ltd. finalized the acquisition and transfer of specified assets at General Motors India's Talegaon Plant in Maharashtra and inked an MoU with the Government of Maharashtra committing to an investment of US$ 722 million (Rs. 6,000 crore) in the state.
In January 2024, Mahindra & Mahindra Ltd. and the India-Japan Fund ("IJF"), managed by the National Investment and Infrastructure Fund Limited ("NIIF"), entered into a binding agreement, with IJF committing to invest US$ 48.1 million (Rs. 400 crore) in Mahindra Last Mile Mobility Limited (MLMML).
In January 2024, at the Vibrant Gujarat Global Summit, Maruti Suzuki announced the investment plans in Gujarat with a New Greenfield plant and a fourth line in SMG.
In December 2023, Tata Passenger Electric Mobility Ltd. (TPEM) and Bharat Petroleum Corporation Limited (BPCL) signed an MoU to jointly establish 7,000 public charging stations nationwide to enhance customer satisfaction.
In December 2023, Maruti Suzuki India Limited entered into an agreement with the Government of Haryana to establish the second Japan-India Institute for Manufacturing (JIM) as part of its corporate social responsibility (CSR) initiative. The company will invest US$ 698 thousand (Rs. 5.8 crore) to upgrade the existing ITI Kansala into a JIM.
In December 2023, Hero MotoCorp announced a partnership with Ather Energy for an interoperable fast-charging network in India which will cover 100 cities with over 1900 fast-charging points.
In November 2023, TVS Motor announced its entry into the European market through a distribution agreement with Emil Frey, a renowned automotive distribution company with a century-long legacy.
In November 2023, SAIC Motor and JSW Group announced a strategic joint venture to accelerate growth with focus on green mobility.
In November 2023, Tata Motors inaugurated its state-of-the-art Registered Vehicle Scrapping Facility in Chandigarh.
In October 2023, Hero MotoCorp inaugurated its first state-of-the-art premium dealership in India.
In October 2023, Tata Motors signed a definitive agreement to acquire a 27% stake in Freight Tiger, a software-as-a-service (SaaS) company, for US$ 17.99 million (Rs. 150 crore).
In July 2023, Renault Nissan to invest US$ 1,68,762.86 (Rs. 1.4 crore) to upgrade infrastructure at eight schools near Chennai.
In July 2023, Mahindra & Mahindra is in advanced talks with British International Investment (BII) and some other global investors to raise up to US$ 602.72 million (Rs. 5,000 crore) for its electric vehicles (EV) unit.
In June 2023, Tata Motors will invest US$ 2 billion towards developing new products and platforms over the next four years.
In June 2023, Hero MotoCorp to invest up to US$ 180.81 million (Rs. 1,500 crore) for developing premium bikes and EVs in India.
In June 2023, Kinetic Green Energy and Power Solutions are planning to raise up to US$ 100 million by selling a 10-15% stake in the company to investors.
In May 2023, Maruti Suzuki India plans to invest over US$ 5.5 billion to double capacity by 2030.
In April 2023, Power Finance Corporation Ltd (PFC) approves US$ 76.39 million (Rs. 633 crore) loan for 5,000 passenger EVs and 1000 cargo EVs.
In March 2023, the Central government sanctions US$ 72.41 million (Rs. 800 crore) under FAME India Scheme Phase II to Indian Oil (IOCL), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), for setting up 7,432 public fast charging stations across the country.
In the January-June period this year, Mercedes-Benz posted its best-ever half-yearly sales in India at 8,528 units, a growth of 13% a year-ago. During the same period BMW and Audi came at the 2nd and 3rd position with sales of 5,867 and 3,474 units, respectively.
In February 2023, Nissan and Renault plan to invest US$ 600 million in India over the next 3-5 years to expand their market share in passenger cars and electric vehicles.
In February 2023, German luxury car maker Audi India began local production of the Audi Q3 and Audi Q3 Sportback at the Skoda Auto Volkswagen India Private Limited (SAVWIPL) plant in Aurangabad.
In January 2023, MG Motor India planned to invest US$ 100 million to expand capacity, eyes 70% growth in 2023.
Tata Group Chairman, Mr. N Chandrasekaran said that "EV contribution in our portfolio is likely to increase to 25% in five years and reach 50% by 2030, thus significantly increasing investments in this sector“ in January 2023.
In January 2023, Global chief executive officer (CEO) Mr. Ola Kallenius said that India was Mercedes-Benz’s fastest-growing market worldwide in 2022 and plans on investing more.
Indian carmakers commit US$ 10 billion to add new capacity of 2.2 to 3 million units.
Notes: *Data except for BMW, Mercedes, JLR, Tata Motors & Volvo Auto. ** Data except for Daimler, JBM Auto & Scania.
References: International Organization of Motor Vehicle Manufacturers, Media Reports, Press Releases, Department for Promotion of Industry and Internal Trade (DPIIT), Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2025-26
