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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SPARX Group Co., (SPARX) has announced the establishment of the Mirai Creation Fund IV (Fund IV), with initial capital from major Japanese financial institutions and Toyota Motor Corporation. The fund targets total commitments of JPY 100 billion by March 2027 and is scheduled to begin investment operations in June 2026.

The fund marks a strategic evolution from its predecessors by integrating the investment scope of the Space Frontier Fund into the Mirai Creation framework. Consequently, Fund IV will focus on four key technology categories: Intelligent Technologies (including AI), Robotics, Carbon Neutrality and Space.

Fund IV is backed by five core participating companies – Toyota Motor Corporation, Sumitomo Mitsui Banking Corporation (SMBC), MUFG Bank, Mizuho Bank and SPARX – with an initial combined investment of approximately JPY 15 billion. The fund will be managed by SPARX Asset Management Co, a subsidiary of SPARX.

The fund aims to accelerate innovation by investing in unlisted venture companies, both within Japan and internationally, that possess transformative technologies. The inclusion of Space as a core category reflects a broader strategic integration, following the 2024 launch of the Space Frontier Fund II, aimed at leveraging space-related technologies to drive terrestrial growth and sustainability.

This move continues a decade-long partnership between SPARX and Toyota, which began with the first Mirai Creation Fund in 2015. Since then, the funds have raised over JPY 177 billion and invested in more than 150 companies globally, focusing on technologies that address critical social issues and promote human well-being

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Maruti Suzuki India, the country’s largest passenger vehicle manufacturer, has announced the launch of DesignXathon 2026, the second edition of its flagship automotive design challenge.

The competition is open to students from Indian and global design institutes based in India, offering a platform to showcase futuristic mobility concepts.

The theme for this year's challenge is ‘Envision an iconic vehicle, Gen Z and Alpha aspire to own in 2036.’ Participants are tasked with designing a vehicle tailored for the 2035-2040 period, focusing on lifestyle relevance, sustainability and the integration of design philosophy with emerging technology.

DesignXathon 2026 will have cash rewards of up to INR 450,000, the winners have the opportunity to secure a 6-month internship with the Maruti Suzuki design team. The top 25 shortlisted teams will receive direct mentorship from experienced automotive design professionals. The last date for application submission is 13 July 2026.

The inaugural 2025 edition saw participation from over 400 students across 70 institutes, with winners emerging from the MIT Institute of Design, VIT Vellore and Strate School of Design. Currently, eight students from the first edition are undergoing internships with the company.

Hisashi Takeuchi, Managing Director & CEO, Maruti Suzuki India, said, “Automotive design goes far beyond aesthetics; it is a blend of innovation, creativity, and fresh perspectives. I strongly believe that young minds play a pivotal role in challenging conventional design thinking and shaping the future of mobility. Through DesignXathon, we aim to nurture emerging talent and lay the foundation of a strong design ecosystem in India.”

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Prime Minister Narendra Modi outlined a transformative vision for India’s automotive and energy landscape, urging a strategic pivot toward alternative fuels and improved logistics to shield the economy from global volatility.

The Prime Minister was addressing a significant gathering in Telangana on Sunday, speaking against the backdrop of the ongoing West Asia energy crisis.

He emphasised that India’s automotive sector is central to navigating current geopolitical headwinds and highlighted the ‘unprecedented progress’ in ethanol blending, positioning it as a cornerstone of India’s sequential energy diversification strategy.

The Prime Minister detailed the government’s evolution in fuel management, noting that the initial push for universal LPG coverage has paved the way for a more sophisticated energy mix.  

The government is aggressively promoting CNG-based transport systems nationwide to provide a cleaner, cost-effective alternative to traditional liquid fuels.

"The need of the hour is to use petrol, gas, and diesel with great restraint," Modi asserted, framing energy conservation as a matter of national security. He noted that judicious consumption is essential to ‘save foreign currency and reduce the adverse effects of war crises.’

On the infrastructure front, the Prime Minister underscored the massive INR 1,750 billion allocation toward National Highway development. This 12-year investment trajectory has yielded significant results for the automotive and logistics sectors, particularly in southern India.

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German automotive luxury brand Porsche has announced the closure of three subsidiaries, as part of its strategic realignment to refocus on its core business.

The move comes following the sale of its stakes in Bugatti Rimac and the Rimac Group.

The strategic decision affects more than 500 employees across –

• Cellforce Group: Based in Kirchentellinsfurt, the battery cell specialist no longer fits the company's ‘technology-open’ powertrain strategy. An estimated 50 employees are set to be affected.
• Porsche eBike Performance: Operations at sites in Ottobrunn and Zagreb will be discontinued due to shifting market conditions for e-bike drive systems. This affects around 350 employees.
• Cetitec: The Pforzheim-based software developer, which specialised in data communication, will be closed. The move affects 60 employees in Germany and 30 in Croatia.

The management of these subsidiaries will now begin discussions with relevant works councils to manage the closures. The integration of software scopes from Cetitec is expected to align with Porsche’s broader restructuring of its Research and Development division.

Dr. Michael Leiters, Chairman of the Executive Board of Porsche, said, “Porsche must refocus on its core business. This is the indispensable foundation for a successful strategic realignment. This forces us to make painful cuts — including our subsidiaries.”

This restructuring follows yesterday's announcement regarding the suspension of the Car-IT division and its integration into the R&D department under Dr. Michael Steiner. The company continues to adapt its industrial footprint to navigate what it describes as a challenging phase of transformation in the automotive sector.

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