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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European automotive group Stellantis has announced an investment of approximately INR 40 billion (EUR 400 million) to scale its Indian operations under its FaSTLAne 2030 strategy. The commitment brings the manufacturer's cumulative capital deployment in India to INR 150 billion by 2030.

The roadmap outlines 12 vehicle introductions over the next three years across its Jeep and Citroen brands, comprising 7 new models and 5 major product upgrades. The releases will span the B, C and D SUV segments, alongside a multi-purpose vehicle, an A-segment car and a pickup truck.

The initial product under the expanded plan is scheduled for commercial launch in Q2 of 2027. Powertrain options will include internal combustion engines, hybrid, plug-in hybrid and battery-electric platforms, supported by a target local component sourcing level of 90 percent across its manufacturing plants in Ranjangaon, Thiruvallur and Hosur.

Tianshu Xin, COO, Stellantis Asia-Pacific Region, said, "India has a dual role for Stellantis: it is an important market that we intend to grow in, and an increasingly significant capability base for the region and the wider Group. India is a long-term commitment for us, not just a volume chase. Under FaSTLAne 2030, our region-led model gives the India team greater ownership of decisions, and the roadmap we are announcing today reflects our long-term conviction in this market. A stronger product cadence, a multi-energy technology approach and India’s capabilities across manufacturing, engineering, software and sourcing give us the foundation to build a larger and more competitive business here through 2030."

Shailesh Hazela, CEO & MD, Stellantis India, said, "Our commitment to India will be measured by what we put on the road. Having built a strong foundation over the years, our focus now shifts to scaling the business. Twelve launches across Jeep and Citroën over the next three years will significantly broaden our market participation and give Indian customers more choice across segments and powertrains, supported by deeper localisation and a stronger sales and service network. With fresh investment of approximately ₹5,000 crore, we are building greater scale, relevance and competitiveness in this market, while strengthening India’s role in Stellantis’ global operations."

The investment phase expands on the INR 110 billion previously deployed by Stellantis in India for manufacturing facilities, software development centres in Bengaluru, ICT hubs in Hyderabad and regional component export channels.

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The Society of Indian Automobile Manufacturers, the apex body representing automakers across segments in the country, has released the wholesales data for Q2 FY2027, which saw record performance across passenger vehicles, commercial vehicles, three-wheelers and two-wheelers.

In Q2 FY2027, the passenger vehicle segment domestic sales reached 1.36 million units, up 30.7 percent YoY. Sports Utility Vehicles (SUVs) accounted for 68 percent of total passenger vehicle sales, recording a growth of 34.2 percent, while passenger car sales increased by 24.9 percent. Passenger vehicle exports declined by 5.2 percent to 229,087 units, impacted by logistics constraints in West Asia and higher baseline comparison figures.

The two-wheeler segment posted domestic sales of 6.43 million units, registering a growth of 15.2 percent YoY. Scooter sales increased by 27.7 percent, while motorcycle sales rose by 7.4 percent. Two-wheeler exports reached a record Q2 total of 1.65 million units, marking an increase of 27.7 percent over the same period last year.

In the three-wheeler category, domestic sales grew by 23.6 percent to 285,342 units, driven by demand for cargo configurations and electric L5 vehicles. Three-wheeler exports reached a record Q2 total of 161,060 units, representing a 30.4 percent increase. The commercial vehicle segment recorded domestic sales of 309,063 units, marking a growth of 28.7 percent, while commercial vehicle exports rose by 72.5 percent to exceed 41,416 units, supported by infrastructure spending and fleet replacement demand.

Shenu Agarwal, President, SIAM, said, "The Indian automotive industry delivered a strong performance in the first half of FY2026-27, following a robust second quarter and a strong September 2026. This stellar performance across all segments of the automobile industry has been supported by improved affordability following GST 2.0, resilient rural and urban demand, healthy freight movement, infrastructure-led economic activity, and a gradual replacement cycle across vehicle segments. The electric vehicle ecosystem also continues to mature with multiple offerings, improving charging infrastructure and supportive policy measures. At the same time, alternative fuel technologies are witnessing increasing acceptance and are expected to play an important role in India's sustainable mobility transition. Industry looks forward to the festive season for the continued momentum while remaining cautiously optimistic due to prevailing geo-economic uncertainties. Continued investments in infrastructure, sustained economic growth, and rising adoption of cleaner and more efficient mobility solutions are expected to support industry growth through the second half of 2026-27."

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FADA Academy, in collaboration with the Automotive Skills Development Council (ASDC), has inaugurated its first joint skill development centre in Agra.

Located within the dealership facilities of Ashok Auto Sales and Manoram Bajaj Group, the Autograd Regional Skill Development Centre establishes a training framework situated directly inside automotive retail operations.

The facility aims to address workforce gaps in automotive retail by providing candidates with training matched to dealership job roles. The initial cohort at the centre consists of candidates undergoing instruction for the Service Advisor role, supported by participating dealerships representing brands including Bajaj Auto, TVS Motor Co, India Yamaha Motor and Tata Motors.

C S Vigneshwar, Chairman of FADA Academy & Research, said, "FADA Academy is committed to strengthening the capabilities of India's automotive retail workforce through industry-relevant education and training. The establishment of our first joint training centre with ASDC at Agra is an important milestone in this journey. By bringing training into the dealership environment, we can create a stronger connection between learning and actual workplace requirements. Our vision is to create local employment opportunities, support the talent requirements of dealerships and provide aspiring professionals with a foundation for long-term career progression within the automotive sector. We also want to ensure that candidates are not merely trained to secure a job, but are equipped to perform with confidence, deliver value to their employers and build long-term careers in the automotive industry. We hope this initiative will serve as a replicable model for dealership-led skill development across the country. The automotive sector is evolving rapidly, driven by new technologies, changing customer expectations and increasingly sophisticated dealership operations. This makes industry-aligned skill development more important than ever. The FADA Academy–ASDC joint training centre at Agra is a progressive initiative that brings structured training closer to the workplace and enables candidates to develop competencies relevant to their designated job roles."

The inauguration event was attended by Union Minister of State Prof. S. P. Singh Baghel, ASDC Chief Executive Officer Prasanna Pahade, FADA Uttar Pradesh Chairperson Sandeep Narain and leadership representatives from local dealer groups. The initiative forms part of a broader framework intended to be replicated across other regions to train dealership personnel.

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Larsen & Toubro (L&T) has signed a Memorandum of Understanding with TuTr Hyperloop, an IIT Madras-incubated deep-tech startup, to develop and deploy next-generation mobility infrastructure in India.

The agreement creates a framework for L&T and TuTr Hyperloop to collaborate on Linear Induction Motor-based propulsion systems, vacuum tube structures, pressure management systems, civil engineering works, electrical infrastructure, signalling and telecommunications integration.

Project-specific agreements will follow to define execution terms across freight logistics, port connectivity and industrial transit applications. The technical roadmap aims to progress from linear induction systems toward magnetic levitation and vacuum-based transportation networks.

The partnership combines L&T's engineering, procurement and construction capabilities with TuTr Hyperloop's electromagnetic propulsion research to assess commercial viability, conduct technical feasibility studies and engage prospective customers for hyperloop transit projects in India.

S V Desai, Whole-Time Director and Senior Executive VP of Infrastructure, L&T, said, "Hyperloop represents an exciting frontier in next-generation mobility, with the potential to redefine the movement of people and goods. Its innovative propulsion technology and low-friction environment enable faster transit, improved logistics efficiency, reduced energy consumption and lower emissions. Translating such technological innovation into practical deployment requires robust engineering, scalable infrastructure and close collaboration across the ecosystem. Our partnership with TuTr Hyperloop is a step in that direction."

Prof. Satya Chakravarthy, Professor, IIT Madras, said, "The transition of advanced mobility technologies from research and development to real-world deployment requires strong collaboration between academia, technology developers and industry. This partnership between TuTr Hyperloop and L&T brings together complementary strengths that can help address the engineering and infrastructure challenges involved in scaling next-generation transportation systems. It is an encouraging step towards translating indigenous innovation into practical, deployable solutions for India."

Dr Aravind S Bharadwaj, Co-Founder and CEO, TuTr Hyperloop, said, "At TuTr Hyperloop, our focus is on developing indigenous mobility technologies that can address real-world transportation and logistics challenges. Our collaboration with L&T brings together our capabilities in electromagnetic propulsion, advanced mobility systems and technology development with L&T’s extensive engineering and infrastructure execution expertise. Together, we aim to work on commercialisation these technologies."

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