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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India’s automotive leadership used Society of Indian Automobile Manufacturers' 65th Annual Convention to signal continuity on emissions and safety policy, a pragmatic push on biofuels and electrification and a growing dependence on software-defined vehicles, while framing exports and supply-chain resilience as medium-term priorities.

Prime Minister Narendra Modi, in a special message, said India must achieve “true self-reliance across the entire automotive manufacturing value chain,” adding that “as the nation advances towards global leadership in green and smart transportation, opportunities for investment and collaboration are immense.”

Union Road Transport and Highways Minister Nitin Gadkari said, “We will maintain global alignment on BS7 and CAFE norms to address air pollution issues,” linking the shift to alternative fuels with macro-objectives: “Moving to biofuels helps in reducing India’s crude imports and enhances farmer incomes.”

He added, “For those aiding road accident victims, INR 25,000 will be awarded to Rakshaveers,” alongside ‘insurance up to 150,000 to accident victims,’ while stating that public campaigns and NGO engagement are ‘essential to improve human behaviour to prevent accidents.’

Gadkari also said logistics costs would ‘come down to single digit by year end,’ and cited scrappage progress with ‘more than 300,000 vehicles’ dismantled to date.

Industry capacity and localisation

Union Minister of Heavy Industries and Steel H. D. Kumaraswamy said the production-linked incentive scheme has drawn ‘more than INR 295 billion of capital investments,’ and that the steel ecosystem is working on ‘developing specialised steel for the auto sector to reduce its import dependence.’

Tarun Kapoor, Adviser to the Prime Minister, urged industry to partner with the Anusandhan National Research Foundation and to scale ‘biofuels, gaseous fuel and electric mobility’ and compressed biogas, while ‘working towards enhancing presence in global markets.’

Hanif Qureshi, Additional Secretary, Ministry of Heavy Industries, noted government support to the EV ecosystem since 2015, the installation of ‘8,900+ public chargers’ and ‘around 10,900 e-buses,’ and called for investments in electric heavy vehicles.

Software-defined vehicles and AI

Rajan Wadhera, Member, SCALE Committee and former SIAM President, chaired the session on software-defined vehicles, where Dr Christopher Borroni-Bird, Founder, Afreecar (USA), said, “The path to SDVs is a major disruption for automakers.”

Dr Bird clarified distinctions between connected vehicles and fully software-defined platforms and noting rising software share in value.

A technology leader argued, “Generative AI is not simply another tool; it is a strategic enabler that is fundamentally shaping the Indian automotive sector, while acknowledging enterprise deployments are still early.”

Andreas Tschiesner, Senior Partner, McKinsey & Company, projected that “in 2035, we expect 30 percent of all produced vehicles will be built on zonal EE architectures, with cloud-managed development, AI-powered coding and virtual twins accelerating programmes.”

Exports, FTAs and supply chains

Rajesh Agrawal, Special Secretary, Ministry of Commerce and Industry, said, “India is now increasingly looking at integrating more with the world.”

He added, “We believe the next phase of growth, beyond a 4 trillion economy, will come through exporting to international markets and noting that India has signed FTAs with 27 countries.”

Sudhakar Dalela, Secretary (Economic Relations), Ministry of External Affairs, said, “the domestic market is robust but it is equally important for the auto industry to strengthen exports and diversify its supply chain, integrating into the global markets and value chains.”

SIAM President Shailesh Chandra, who is also MD of Tata Motors Passenger Vehicles and TPEM, pointed to ‘a record 5 million vehicles exported’ and called a recent UK FTA ‘a landmark,’ describing 20 percent export growth as ‘a powerful vote of confidence.’

OEM perspectives and next steps

Shenu Agarwal, Vice President, SIAM, and MD & CEO, Ashok Leyland, said commercial vehicles remain ‘pivotal for sustainable mobility,’ backing CNG and LNG in long-haul and ‘deep localisation of electric mobility.’

K. N. Radhakrishnan, Director & CEO, TVS Motor Company, highlighted ‘strong R&D momentum,’ progress on the circular economy and the need to ‘focus on developing local talent,’ adding, ‘The customer should remain at the centre of all decision making.’

Unsoo Kim, MD & CEO, Hyundai Motor India, said GST reforms have supported domestic manufacturing and rural demand and that AI will redefine mobility within enabling frameworks under Make in India.

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The Gurgaon-headquartered commercial vehicle major looks beyond just selling trucks and buses. The company’s focus on digitalisation and aftersales, it believes, is what the new-age customers need.

In the high-stakes world of commercial transportation, time is money – quite literally. Every hour a truck is off the road can mean missed deliveries, idle drivers, delayed shipments and unhappy customers. In India’s competitive commercial vehicle (CV) industry, the ability to minimise downtime and maximise uptime has become a critical differentiator for automakers.

For VE Commercial Vehicles, this principle has been elevated into a business philosophy. Over the past few years, the company has invested heavily in digital tools, predictive maintenance capabilities and an expanded service footprint to ensure that customers’ vehicles are running at peak performance for as many hours of the year as possible.

In an exclusive interaction with Motoring Trends, Ramesh Rajagopalan, EVP - Customer Service, Retail Excellence & Network Development, at VECV, shared his team’s work spans a network of over a thousand service points, a nationwide telematics backbone and a growing portfolio of uptime initiatives that integrate technology, training and process discipline.

Building a network

VECV’s current footprint exceeds 1,100 outlets across India, with an average of 10–12 new additions each month. This network covers the full range of commercial vehicles – from heavy-duty trucks and buses to light and small commercial vehicles.

The company’s growth is not limited to conventional CV outlets. The small commercial vehicle (SCV) network, particularly for electric models, is being built almost from scratch.

Rajagopalan revealed that the company is “working towards creating a network of exclusive dealerships for the newly launched Eicher Pro X, designed to deliver a premium, digitally enabled customer experience. These born-digital outlets will function as one-stop destinations offering advanced product customisation, EV-ready infrastructure and seamless access to connected services. With a focus on uptime, personalisation and convenience, the Pro X dealerships will redefine commercial vehicle retail by offering a car-like, modern environment tailored to the evolving needs of today’s fleet operators.”

“The starting point for us was to identify where we’re missing out – the ‘white spots’, where customers are already buying trucks and buses, but we aren’t present. The East and Northeast were clear gaps. We also looked at the service side: customers expect to have the nearest touchpoint for any service need, parts availability anywhere and 24x7 breakdown support,” he said.

These expectations are complicated by India’s rapidly evolving road infrastructure. With new expressways and freight corridors coming online, VECV has had to rethink its physical network, sometimes relocating facilities, other times adding new ones to stay close to high-traffic routes.

Telematics as the backbone of service planning

The decision to equip 100 percent of VECV’s BS6 vehicles with telematics was a strategic move made early in the transition to the stricter emission norms. The company shared that the BS6 trucks are far more electronically complex, with multiple sensors feeding real-time data on performance, emissions and potential faults.

Rajagopalan explained, “In BS6, any sensor failure that risks an emissions breach triggers a limp-home mode. That’s standard globally. But it can disrupt a customer’s operations if not handled quickly. We saw early on that predictive algorithms could identify error-code patterns that lead to breakdowns, allowing us to intervene before the vehicle stops.”

One example is AdBlue misuse – diluting diesel exhaust fluid with water, which can cause the vehicle to derate. Through telematics, VECV can detect the signs and remotely guide drivers on corrective steps, often via a quick video call.

This predictive maintenance model categorises alerts into three groups:

• Stop Now – requiring immediate action to prevent damage.
• Do It Yourself – where drivers can resolve the issue with guided support.
• Visit Soon – logged into the system so any VECV workshop can address it at the next scheduled service.

Measuring each minute

Digitalisation doesn’t stop at the vehicle. Every VECV workshop uses tablets to track a vehicle from the moment it enters the workshop, through job card creation, repair start and completion, invoicing and gate-out. Customers can see their vehicle’s status in real-time on display boards.

This transparency is more than cosmetic; it drives accountability. Every morning, operational teams review any vehicle that missed its promised delivery time, escalating cases that need additional support.

A recent initiative even monitors waiting times before work begins. If a loaded truck sits for more than an hour, the central control centre calls the dealer to find out why and get it moving. “For our customers, every minute is money. We can’t afford bottlenecks,” revealed Rajagopalan.

Retention in telematics

A common challenge in connected services is renewal beyond the complimentary period. VECV includes two years of telematics subscription with every vehicle and has kept renewal costs at about INR 6,000 annually.

In the early days, renewal rates were low. But targeted engagement – including onboarding every customer on the My Eicher app at delivery, monthly operating review meetings with large fleets and customised reports – has pushed renewal rates among big operators to 80–85 percent.

For smaller operators, overall renewal rates are about 35 percent, but with over 350,000 connected vehicles on Indian roads, the base is significant. VECV also addresses multi-device fatigue – where customers were earlier forced to install separate tracking units for clients or state mandates, by offering API integration, allowing its data to feed into external systems and avoiding duplicate hardware.

Perhaps the most distinctive element of VECV’s service model is its Uptime Centre, located at the company’s manufacturing plant. This facility operates 24x7, staffed with technical experts who can remotely diagnose issues, advise on repairs and escalate complex cases to R&D or manufacturing engineers.

If a problem can’t be resolved remotely within a couple of hours, specialist engineers, or what the company calls ‘flying doctors’, are dispatched to the vehicle location. The Uptime Centre also monitors parts queries, workshop performance and telematics alerts, ensuring that field teams have expert backup at all times.

Parts availability

Downtime isn’t just about repairs, but it is also about parts. To address this, VECV has identified 250 high-demand parts and mandated that every workshop keeps them in stock. If any of these parts is unavailable and not supplied within 24 hours, it is provided free of charge.

This guarantee is part of a broader spare parts strategy that includes decentralised stocking, demand forecasting based on telematics data and close coordination between dealers and the central supply chain.

With trucks and buses running more kilometres per year than ever – e-commerce trucks and long-distance buses reaching 200,000 km annually – service demand is growing even as reliability and service intervals improve.

To meet this, VECV has:

• 70 workshops operating round-the-clock, 365 days a year.
• Nearly 300 workshops running extended hours or double shifts.
• Training programmes to upskill technicians for faster, more accurate repairs.
• Investments in better workshop tools and equipment to boost productivity.

Dealers as partners in performance

Rajagopalan believes dealer capability is as important as infrastructure: “Today’s customers don’t tolerate delays. Delivery commitments that were acceptable in a week are now expected in hours. That pressure flows through the entire supply chain.”

VECV has put process discipline and transparency at the core of dealer operations. Every dealer is connected to the central system, with KPIs on breakdown response time, parts availability and repair turnaround. These metrics are published internally, creating healthy competition among regions to be ‘best-in-class.’

Rajagopalan shared his five strategic priorities or key focus areas –

1. Service Capacity Expansion – adding workshops, increasing working hours and boosting throughput per facility.
2. Competency Development – continuous technician training for faster, first-time-right repairs.
3. Parts Availability – maintaining high stock levels of critical components, backed by guarantees.
4. Predictive Maintenance Evolution – extending analytics beyond sensor data to wear-and-tear parts like clutches and brakes.
5. Telematics Insights – leveraging connected data for deeper operational recommendations to customers.

While much of VECV’s work is grounded in engineering and technology, Rajagopalan emphasises that the company’s philosophy is human-centred. “Our uptime promise is non-negotiable. Every innovation, whether digital or operational, is aimed at keeping our customers’ wheels turning. That’s how they earn and that’s how we build trust,” he said.

From a strategic perspective, VECV’s approach reflects an industry-wide shift. The CV market is no longer just about selling hardware; it’s about selling an ecosystem of services, digital capabilities and operational support – and backing it up with the speed and reliability that today’s logistics-driven economy demands.

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The Finance Ministry, Government of India, has reduced Goods & Services Tax (GST) on new vehicles from 28 percent to 18 percent, effective 22 September 2025.

The move is part of the government’s focus to simplify the tax structure, along with pushing domestic consumption to cushion from external economic impacts such as US tariffs.

For the automotive industry, the government has reduced GST on petrol, petrol-hybrid, LPG, CNG (not exceeding 1200 cc and 4000mm) from 28 percent to 18 percent. Similarly diesel and diesel-hybrid vehicles (not exceeding 1500 cc and 4000 mm) the taxes have been revised to 18 percent. For three-wheelers, motor vehicles for transport of goods and two-wheelers (upto 350cc and below) are being taxed in the 18 percent bracket.

On the other hand, luxury vehicles, two-wheelers (above 350cc) and petrol (exceeding 1200 cc and 4000 mm) and diesel vehicles (exceeding 1500 cc and 4000 mm) are expected to be taxed in the 40 percent bracket.

In what may comes as a cheer for the agrarian economy sector, the government has slashed GST on tractor tyres and part from 18 percent to 5 percent; tractors from 12 percent to 5 percent and agricultural machinery from 12 percent to 5 percent respectively.

Welcoming the decision, Dr. Anish Shah, Group CEO & MD, Mahindra Group, said, “The next-generation GST reforms announced today mark a defining moment in India’s journey towards building a simpler, fairer, and more inclusive tax system. By moving to a streamlined two-rate structure and focusing on essentials that touch the lives of every citizen- from food, health, and insurance to agriculture and small businesses -the Government has reaffirmed its commitment to Ease of Living and Ease of Doing Business. The rationalisation measures will not only provide immediate relief to households but also strengthen key sectors such as  automobiles, agriculture, healthcare, renewable energy, and MSMEs - all of which are vital to job creation and sustainable growth. The correction of long-pending inverted duty structures in critical industries is welcome. At Mahindra, we view these reforms as transformative. They simplify compliance, expand affordability, and energise consumption, while enabling industry to invest with greater confidence. This bold step is in line with the vision articulated by the Hon’ble Prime Minister of building a citizen-centric, future-ready Bharat. It strengthens India’s economic foundations and will help drive the next phase of equitable and inclusive growth- journey towards Viksit Bharat @2047.”

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Toyota Kirloskar Motor (TKM), one of the leading passenger vehicle manufacturers, and Presidency University (PU) in Bengaluru have joined forces to introduce a new M. Tech program in Automotive Information Technology.

The partners have signed a Memorandum of Understanding (MoU), which aims to develop a new generation of engineers with the skills needed for the rapidly evolving automotive industry that is increasingly focused on software and IT solutions.

The four-semester program is designed to provide students with both theoretical knowledge and practical experience. An initial intake of 18 students will have the opportunity to participate in global internships with Toyota, gaining hands-on exposure to advanced technologies.

This collaboration will see both parties jointly develop the curriculum, with TKM providing insights into industry needs and emerging trends. The automaker will also facilitate the setup of specialised on-campus laboratories, while Presidency University will manage the facilities and day-to-day operations.

Leaders from both organizations emphasized the need to bridge the gap between academic learning and industry demands.

G Shankara, Executive Vice-President of Finance and Administration, Toyota Kirloskar Motor, said, “The auto industry is undergoing a paradigm shift with the advent of software-defined vehicles, autonomous technologies and connected mobility solutions. At TKM, we recognise the urgent need to develop a new generation of engineers who are as adept in IT as they are in automotive systems. With Presidency University, we aim to meet our organizational talent requirements and contribute to India’s emergence as a global hub for automotive IT expertise.”

Dr. Nissar Ahamed, Chancellor of Presidency University, said, “This collaboration aims to bridge the gap between academic learning and industry needs. By working closely with Toyota Kirloskar Motor, our students will gain hands-on experience with cutting-edge technologies shaping the future of mobility. We are confident that this initiative will empower our students to lead in a rapidly transforming industry landscape.”

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