The voice about India’s car market staring at stagnancy is growing amid much selling by foreign investors in the stock market. Auto sticks of OEMs and suppliers have taken a beating lately. The reasons for stock market decline are said to be structural issues as well as geopolitical issues. In other words, they are local as well as global in their nature. The Indian auto industry – as the largest contributor of GST to the exchequer and among the highest contributor to the country's manufacturing GPD – is also quite local and global in its ways of working. 

Like any other developing nation, it is a market where the scope for an increase in automobile population is bright. It is also a market that is beset by structural issues nonetheless. With 34 cars owned per 1,000 people, the country with a population estimated to be 1,463,865,525 in 2025 has ample scope for auto sales growth. 

But as banks struggle for liquidity and a reduction in repo rate by the apex bank fails to reflect in the reduction of loan interest rates or equated monthly instalments, the structural issues facing the automobile industry are too stark to overlook.

Adding to the structural issues are perhaps developments such as the recent announecement by Maharashtra Government to levy six percent motor vehicle tax on premium electric vehicles. The leading industrialised state also has among the highest road toll taxes among other Indian states. The highway network in the state is among the most lacking and unsafe. Most roads in the state have either deteriorated or are under a seemingly unending period of repairs. 

The state government in its 2025 budget has also announced that it has raised the motor vehicle tax by one percentage point on individual-owned non-transport four-wheeler CNG and LPG vehicles. Such vehicles currently attract a seven to nine percent tax depending on their type and price.

While electricity costs have been rising with distribution companies like MSEDCL pushing for a revision in fixed and energy charges for various categories in order to bridge revenue gap, owning electric vehicles and CNG vehicles is becoming costlier though eco-friendlier.

Attracting over 200 percent in taxes, petrol and diesel prices have been at an all-time high. A timely upward revision in toll prices is only adding further to the cost of motoring in a country where close to or more than 50 of the vehicle purchase price amounts to taxes. Spares are also taxed at a hefty 28 percent and the labour costs have steeply risen post Covid-19 pandemic.

With vehicle prices being jacked up by automakers under the pretext of rising input costs by about four to five percent if not more, the Indian auto industry is clearly under pressure to maintain its margins and stay profitable.

Against the operating costs, the foot falls in the showroom are taking longer to realise into actual sales. Discounts are gaining speed and indicative of sales losing stream in some of the segments that were until recently doing very well.

Any excitement about a rebate in Income Tax up to INR 1,200,000 – it takes over INR 1,000,000 to purchase a decent car in India today – seeming to have faded into thin air, the talk about government announced a reduction in GST taxes has gained speed. When it would actually come into effect is yet to be known but the narrative has started building. The stock market does not look excited however and the money lost by domestic investors may take a long time to come back, it seems.

As US President Donald Trump speaks about exposing India’s ‘wrong’ tariff policies in the absence of any statement from the Indian government striking out his claims, the Indian market for automobiles and other consumer goods looks destined for a rough ride. Stagnancy will be a part of the plot, the repercussions of which would stem from domestic structural issues as well as geopolitical shifts where calls like ‘China Plus One’ hold no value at all anymore.

With the entry of Tesla – which has seen its sales and stock prices plummet in many of existing markets off late – set to enter India with the government lowering tariff under pressure from the US President, the subject of too much regulation needs to be examined in terms of structural strength and the industry’s ability to be competitive. Local manufacture is also a subject that needs to be looked at as MSME sector continues to shrink and take down with it the PMI index.

Skilling is also a subject that should be looked at as engineering courses lose interest with the young in the country. A manufacturing-less economy that is also witnessing the services sector face a slowdown – again due to structural and geopolitical issues – may not spell a good omen for growth in the long run. This, particularly in the case of a country whose median age in 29 years.

China’s ‘Deep seek’ has shown how the prowess in technology can shift overnight and highly influence the economy of a nation, its stock markets suddenly. In India, the auto industry should nurture the MSME sector as much as the government should. A services alternative in terms of growth over manufacturing may not hold forth in the long-term. Manufacturing exports can shrink abruptly anytime under the shifting regulatory and other market issues in the domestic marketplace and under the shifting geopolitical situations in various parts of the world that also make lucrative export markets.  

Image for representative purpose only. 

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French automotive major Renault Group has appointed Jean-Pierre Diernaz as Vice-President Renault Brand Global Marketing and Chief Branding Officer for all group brands, effective 14th September.

In his dual role, Diernaz will lead marketing activities for the Renault brand while directing the strategy for the group’s brand portfolio, which includes Renault, Dacia and Alpine.

As Vice-President of Renault Brand Global Marketing, Diernaz will oversee marketing operations with a focus on integrating digital systems, data analytics, artificial intelligence and performance management tools into customer engagement strategies. His mandate forms part of the group's futuREady strategic plan, which aims to drive electrification in European markets and expand sales presence across international territories. In his capacity as Chief Branding Officer across all brands, he will manage the market positioning and distinction of each individual badge within the Renault Group portfolio.

Diernaz comes with over 25 years of automotive industry experience. He began his career at Ford before moving to Nissan in 2005, where he held leadership positions including Advertising Director Europe and Vice-President, Marketing & Digital Europe, alongside executive roles at Infiniti.

In 2019, he joined automotive digital transformation firm MotorK as Chief Strategy Officer. Prior to his appointment at Renault, he served at General Motors Europe as Chief Marketing Officer and subsequently as President and Managing Director.

Fabrice Cambolive, CEO Renault Brand and Chief Growth Officer of Renault Group, said, "Jean-Pierre Diernaz is joining Renault at a pivotal moment. Over the past few years, we have embarked on a profound transformation, and our ambition is now to go even further: harnessing the power of the brand, customer insights and new technologies to deliver stronger and more sustainable growth. Jean-Pierre will be responsible for continuing the work already underway to strengthen our ability to create emotion, desire and brand preference. He will also make a decisive contribution to the evolution of our marketing activities by further integrating data, AI and new performance management tools. His ability to combine creativity and digital innovation in service of the business, together with his international perspective, will be essential to sustaining the momentum around electrification in Europe, supporting our development in international markets and contributing to the implementation of the futuREady plan."

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The Sri Lanka Automotive Component Manufacturers’ Association (SLACMA) has appointed its latest Executive Committee, bringing together industry representatives from across the country’s component manufacturing sector.

The new leadership team takes office as Sri Lanka seeks to expand local vehicle assembly, increase domestic value addition and integrate local suppliers into regional and international supply chains.

The association represents manufacturers producing rubber products, electrical components, springs, seating systems, metal parts, trailers and other vehicle assemblies.

A core focus for the organisation is expanding industrial links with India to leverage its automotive manufacturing ecosystem and supplier network.

At present, SLACMA maintains a formal partnership with the Automotive Component Manufacturers Association of India (ACMA) via a Memorandum of Understanding, an initiative commemorated during Automechanika New Delhi 2026 to mark 10-years of institutional cooperation.

The implementation of Sri Lanka’s vehicle assembly Standard Operating Procedure (SOP) has created frameworks for local component integration. Local suppliers currently manufacture parts for vehicle assembly programs involving international and Indian brands, including Tata Motors, TVS Motor Co, Bajaj Auto, Mahindra & Mahindra, Ashok Leyland, Hyundai Motor India, BAIC, DFSK, JAC Motors, Proton, Wuling, JMC and Chery.

In global markets, Sri Lankan manufacturers supply components to international original equipment manufacturers. Lanka Harness Company produces safety components, including airbag sensor switches, seatbelt sensor switches and sun visor harnesses for brands such as Toyota Motor Corporation, Aston Martin and BMW. Electronics manufacturing services provider Variosystems manufactures electronic assemblies for international clients, including Bombardier.

The newly appointed Executive Committee is led by President Dimantha Jayawardena, Vice-President Athula Haputantri, Secretary Thisal Jayathilaka, Treasurer Dr Shriyantha Cooray and Deputy Secretary Vidurshan Gopalakrishnan.

The committee members represent brands such as Shamini Rubber Industries, Modicon Group, Bopitiya Auto Springs, Dyno Innovations, OREL Group, M.V. Electronic, Accolade Ventures Group and LPG Rubber Industries.

Dimantha Jayawardena, President, SLACMA, said, “As an Association, our priority will be to work collectively with our members, policymakers and industry stakeholders to address the challenges facing the sector while creating opportunities for greater local value addition, technological advancement and international competitiveness. I am confident that, with the experience and commitment of the new Committee, SLACMA can continue to build a stronger platform for collaboration and contribute meaningfully towards the long-term development of Sri Lanka’s automotive manufacturing industry.”

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Indian automotive retail sales reached nearly 2.5 million units in August 2026, marking its best-ever performance for the month. A total of 2.42 million units were sold last month, which translates to a 17.51 percent YoY growth as per the latest data released by the Federation of Automobile Dealers Associations (FADA).

In terms of segment-wise sales, two-wheelers at 1.71 million units, passenger vehicles at 402,398 units, construction equipment at 5,166 units and commercial vehicles at 90,769 units, clocked strong double-digit YoY growth.

Interestingly, the penetration of alternative energy (CNG, hybrid and electric) in the passenger vehicle segment at 41.95 percent, surpassed petrol vehicle demand at 40.85 percent for the first time in the country.

The industry body attributed the shift to running-cost economics and continuing consumer hesitation around the E20 transition, which pushed petrol buyers towards CNG, hybrids and EVs.

Sai Giridhar, President, FADA, said, “Even as retails eased 6.48 percent over a record July on the seasonal monsoon lull and a festival calendar that shifted Ganesh Chaturthi and the spillover of Onam-led buying into September. Two-wheelers, passenger vehicles, commercial vehicles, tractors and three-wheelers each set fresh August records, and overall registrations were the highest ever for the month.”

“The defining development of the month, however, was a structural one: for the first time in India’s history, alternative fuels – CNG, hybrid and electric combined – overtook petrol in the passenger vehicle market, at 41.95 percent against petrol’s 40.85 percent. A little over a year ago petrol led this contest by nearly 11 percentage points; that lead has now been erased. We would, however, read the headline with discipline: much of the YoY strength rests on a soft August 2025 base, when buyers had deferred purchases awaiting the GST 2.0 rate cut, and dealers report that the festive curtain-raiser came in below their own expectations – the true test of the season lies in showroom conversion through September to November, not in year-on-year optics,” he said.

On the other hand, tractor sales at 87,977 units, witnessed flat growth, due to the widening monsoon deficit of about 13 percent across 14 states.

But rural passenger vehicles at 24.9 percent YoY, as against 10.9 percent YoY growth in the urban segment, pointing to a stronger base demand decoupled from the monsoon.

“Rural demand, in other words, has begun to decouple from the monsoon — the farm-income-linked segment softened, yet the non-farm rural economy of livelihood mobility, goods movement and construction kept accelerating. For an industry long accustomed to reading rural India through the rainfall map, that is the quiet structural marker of FY27, and a measure of how broad-based Bharat’s consumption has become,” pointed out Giridhar.

The two-wheeler segment at 1.71 million units recorded its peak for August since 2018, despite a 5.7 percent decline over July 2026.

FADA attributed sustained GST 2.0 affordability and steady rural demand to the performance. Interestingly, electrification in the segment crossed the 10 percent mark at 10.68 percent, as against 7.6 percent a year ago.

Similarly, electrification in the commercial vehicle segment too reached its highest-ever at 5.18 percent from a 2.06 percent penetration last year.

FADA expressed caution on the passenger vehicle inventory rose to 38-40 days, an additional 5 days over July 2026, as against the recommended 21-day benchmark. “With festive stocking now underway, we urge PV OEMs to bill strictly to retail so that dealer capital is not locked in ageing inventory,” said Giridhar.

Going forward, the industry body expects a positive growth story with the festive season leading to increased demand. But widening monsoon deficit and price hikes by OEMs could affect demand.

Furthermore, FADA has shared its outlook for the three-month period (September to November), which incorporates major festivals including Ganesh Chaturthi, Navratri, Dhanteras, and Diwali (November).

Dealers identified festive demand failing to meet expectations as the primary operational risk, cited by 29.06 percent of respondents. Additional risks include the impact of below-normal rainfall on rural demand, noted by 17.52 percent of dealers, and price increases affecting consumer affordability, identified by 11.11 percent.

FADA stated that retail sales figures for October and November will be compared against the previous year's high base, which was influenced by GST rate adjustments, alongside the calendar shift of Diwali into November. Total retail sales for the 2027 financial year have risen 18.47 percent over the initial five-month period. FADA noted that price increases driven by input costs have reduced the consumer affordability cushion provided by tax revisions across entry-level passenger vehicles, commuter two-wheelers, and commercial vehicles.

The industry body highlighted supporting structural factors, including a stable central bank repo rate, electric vehicle promotion policies and rural economic growth. Non-fossil fuel powertrains have passed petrol options in passenger vehicle retail volumes. Water reservoir levels supporting the upcoming Rabi crop cycle and non-agricultural rural activity were cited as additional factors supporting demand across rural regions.

“Two-wheelers should draw support from festive demand and the alternative-fuel shift, though rural cashflows remain hostage to late-season rainfall; Passenger vehicles enter September with fresh launches and healthy pipelines but must convert them against elevated inventory and a demanding base; and Commercial Vehicles should firm up as post-monsoon freight, infrastructure and harvest movement resume. Overall, the outlook for September’26 appears Cautiously Optimistic – with festive conversion and the monsoon’s closing behaviour the key swing factors,” concluded Giridhar.

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The Executive Committee of the Society of Indian Automobile Manufacturers (SIAM) has elected Shenu Agarwal, Managing Director and Chief Executive Officer of Ashok Leyland, as its President for the 2026–27 term.

The election took place during the organisation's Executive Committee meeting in New Delhi.

Agarwal, who previously served as Vice-President of the SIAM, succeeds Shailesh Chandra, Managing Director and Chief Executive Officer of Tata Motors Passenger Vehicles.

The Executive Committee also elected K N Radhakrishnan, Director and Chief Executive Officer of TVS Motor Company, as Vice-President for the 2026–27 term. Santosh Iyer, Managing Director and Chief Executive Officer of Mercedes-Benz India, was elected as Treasurer.

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