The Indian car market has played an understated role on the world’s passenger car market up until now, given the size of its population. With a younger than average population, it is forecast to become the world’s most populous nation within the coming decades, surpassing that of neighboring China. The over four million passenger car sales in 2018, promoted it to the world’s fourth largest passenger car market sandwiched between Japan and Germany and behind the USA and global leader, China - making it the ‘best of the rest’ of the BRIC (Brazil, Russia, India, China) nations.
SIAM, the Indian passenger car manufacturers association, estimate that the passenger car market is likely to move ahead of Japan by 2020 making it a top three global market. Motorcycles remain the mobility of choice in a market where two-wheeled powered vehicles outsell passenger cars by five-to-one. China illustrated how, once momentum builds, a two-wheel mobility nation can rapidly transform into a four-wheel nation. A potential consequence of the forecasted growth would likely come at the expense to the environment, which the Indian government is addressing through tougher emissions regulations.
The near global magnetic draw towards SUV/Crossovers hasn’t passed India by. The growing market share going to these vehicles, albeit smaller and more basic, due to smaller budgets and fiscal restrictions - heavily influencing the dimensions of vehicles - are sculpting a new face to India’s roads. The task of offering budget vehicles but not making them overtly budget is a fine challenge on the Indian subcontinent. ŠKODA, due to assume responsibility for the Indian market on Volkswagen Group’s behalf, as part of the ‘INDIA 2.0’ project, will launch an SUV/Crossover model designed and manufactured in the Indian market from next year (2020). The vehicle will be the first based on the, specially modified for India, MQB (Modular Transversal Toolkit) platform. The major part of the technical development will take place locally in India. Following the introduction of the new modified architecture, all proceeding Volkswagen Group models sold and manufactured locally will be based on this architecture which already fulfills the stricter legal requirements for India, coming into force by 2020. The strategic aim of ‘INDIA 2.0’ is to improve on the Group’s current market position and focus on the local and complex regulatory framework while in the process making the company more local.
The Indian market is dominated by locally-established Asian manufacturers with a market presence stretching far back. Although Volkswagen Group brands’ have only a comparatively minor market share in India, a new chapter will begin in 2020 when the Group goes on the offensive. ŠKODA, active on the Indian subcontinent since 2001, having sold one quarter of a million vehicles since then and consistently increasing its sales in recent years, aim to carve out more of a foothold in the hugely promising and diverse market from 2020. The current state of play is that ŠKODA accounted for roughly half the amount of Volkswagen’s sales in India last year with both brands combined volumes commanding a lower single digit market share of the combined market. INDIA 2.0’s initial target is to achieve five per cent market share by 2025.
From 2020 new emissions standards will be enforced, marking a new chapter in India’s passenger car market. In an unusual occurrence the government has decided to skip an emission standard norm, jumping directly from the current BS-IV (Euro 4) to BS-VI (Euro 6). Thanks to early developments, all Volkswagen Group models based on the ‘INDIA 2.0’ strategy will be compliant. In a further aim to improve emissions and narrow its exposure to imported energy sources, the ministry of power has proposed a 30 per cent EV sales target by 2030. However, infrastructure will have to be dramatically improved by then with a recent study by Here Maps showing Mumbai has just a handful of public charging stations. Volkswagen Group are ready to respond as soon as the market is ready for electric vehicles. One further trend in India is the growing Mobility-as-a-Service sector. Thanks to a young smartphone generation - smartphone use is likely to reach 500 million by 2020 according to Statista data - young Indians are increasingly using these for ride hailing services. One of the largest smart-phone based ride hailing services in India, OlaCabs with 150,000 drivers aim to help reach the milestone of having one million electric vehicles - including three-wheelers - on India’s roads by 2021.