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Tata Capital > Blog > Circulating Capital Loan > Automotive industry trends to watch out for in 2022

Circulating Capital Loan

Automotive industry trends to watch out for in 2022

Automotive industry trends to watch out for in 2022

The Indian automotive industry has transformed drastically in the recent past and is leaping forward to become the world’s third-largest automotive market in terms of volume by 2026. The automotive industry’s evolution over the last few years is characterized by electrified, leasing, autonomous, shared ownership and connected cars.

Despite being hit with the socio-economically debilitating Coronavirus pandemic, the Indian automotive industry has emerged stronger and shown remarkable resilience. Widespread digitization and technology adoption has played a crucial role in transforming the automotive industry. The government of India has also introduced product-linked incentives and a scrappage policy to provide a much-needed boost to the auto industry.

Here is a sneak-peek into some of the emerging trends that will impact and influence the automobile industry in 2022:

Electric Vehicles

In the last few years, sustainable mobility solutions have witnessed increased acceptance and interest in consumers for electric vehicles.

Electric vehicles (EV) have captured a greater market and exist in all the major segments – scooters, motorcycles (Revolt RV 400, Bajaj Chetak), compact SUV (Tata Nexon) and a wide range of luxury EVs (BMW, Porsche, Audi, Jaguar).

With the support of several government initiatives, the electric vehicles market is only expected to grow exponentially. Apart from electric vehicles, India is also preparing to test hydrogen-powered cars. It is expected that large commercial vehicles like buses and trucks would be the first ones to head towards this transition.

Electric vehicles manufacturing come with various cost optimizations and reduction in the GST outflows for the customer. Still, they also come with varying manufacturing challenges, infrastructure constraints, and customer resistance to adopting them. 2022 will see this battle play out between auto manufacturers and end-users.

Additional Read – 9 Business Trends to look out for the year

Shortage of semiconductors

Semiconductors, also known as chips, have been strong drivers of automobile innovation. Semiconductors enable navigation, sensors, traction control and autonomous driving aids. However, there is a massive shortage of semiconductors that has disrupted the production of the Indian automobile industry.

This crisis is likely to continue in 2022 and impact automobile production in the country. However, the situation will also provide greater opportunities for semiconductor manufacturers to consider investing in India. It is expected that Indian manufacturers will enter into semiconductor manufacturing and meet the automobile and electronic industry requirements domestically.

Automotive-industry-trends

Scrappage policy

Vehicle scrappage policy is recently launched to scrap old vehicles and reduce pollution. It expects to cover 51 lakh Light Motor Vehicles more aged than 20 years and 34 lakh Light Motor Vehicles above 15 years of age. This policy aims to reduce environmental pollution by phasing out old or unfit vehicles running without a valid fitness certificate. This move will increase demand for new cars in the market.

Vehicle connectivity

Internet connectivity based on 5G is one of the significant emerging trends in the automotive industry. Integrating innovative technology within automobiles will improve communication with other vehicles, maintain an optimal speed on a particular route, avoid traffic, and facilitate early identification of emerging crashes or roadblocks.

Automobile brands like MG and KIA have launched internet-enabled cars sharing data with external devices.

Additional Read – Pre-budget expectations for the retail consumer

Car Leasing

Leasing is an attractive option to drive a brand-new car without investing large sums up front, resulting in substantial savings and increased return on equity.

Post pandemic, car leasing has become a convenient, feasible and lucrative option to drive the latest car rather than rely on cab aggregators for physical safety from the virus and convenience. This emerging preference is likely to stay and influence the automobile industry.

Reach out to Tata Capital Corporate experts to get an in-depth understanding of the variety of leasing solutions and access low-cost car leases.

The emerging trends like digitization, new government initiatives, electrified vehicles and technological advancements will revitalize the growth of the automotive industry in India. It is essential to keep pace with the rising trends to meet customer expectations. Also, the advent of new technologies can help build sustainable manufacturing processes, create employment opportunities, and enhance penetration of the automotive industry. Keep an eye on these emerging trends and stay agile to stay ahead of the curve and competition.

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