Increased demand and strategic shifts by global corporations are acting as growth factors for the sector. The home-grown automobile sector is also relying on this new-age trade practice as it allows companies to reduce capital expenditure on infrastructure, equipment and labour. 

Different industries within India have found a fondness towards contract manufacturing owing to several factors. The sector is experiencing significant growth driven by increased demand and strategic shifts by global corporations.

Policies like ‘Make in India’ act as a catalyst for the growth by offering incentives to boost domestic manufacturing. The Central Government has also introduced measures to attract foreign investment in electric vehicle (EV) manufacturing, aiming to establish India as a hub for EV production.

The home-grown automotive sector is also seen relying more on this new-age trade practice. From commercial to passenger vehicles, contract manufacturing allows automakers to reduce capital expenditure on infrastructure, equipment and labour. Instead of investing heavily in setting up factories, companies can focus on product development, marketing and other areas while leveraging third-party manufacturers.

Speaking to Motoring Trends, Layam Group Chairman G S Ramesh said, “The automobile industry encompasses plenty of activities including assemblies, subassembly etc. Currently, there is a shortage of labour within the industry. Contract manufacturing is picking pace as it helps companies to offload certain responsibilities without compromising on quality standards.”

“Companies involved in contract manufacturing take full responsibility of the products and are extremely cautious about quality and skill aspects. They produce the products in tandem with set quality standards and get paid in return,” he added.

Companies involved in this model also cut back on employee costs as contractors hire their own workforce and are responsible for their career progression.

Layam Group is involved in automobile, smartphone and other sectors for contract manufacturing. It reported an INR 3-4 billion turnover with 70 percent revenue coming from the automobile and engineering sectors.

Commenting on the same, Ramesh explained, “We have been involved in the space for the past few years. We have undertaken two kinds of models. One is contract manufacturing, and the other is job contract model. In the job contract model, we assume the role of a third-party quality inspector of the contract issuer’s product line.”

Alluding to vehicle segments the company manufactures under contracts, he noted, “We are involved in the commercial vehicle segment, where we produce the body frame for Tata Motors’ buses. We produce electric buses too and are also involved in logistics, shell making, final panelling etc. The manufacturing unit is in Dharwad and Lucknow.”

Commenting on market opportunities, the executive noted, “India’s contract manufacturing sector presents a compelling growth story, driven by rising demand for trusted partners among OEMs and smaller manufacturers alike. The opportunity lies in how effectively firms can position themselves as reliable collaborators. Clients are increasingly open to outsourcing, provided they find dependable service providers, creating a strong business case for contract manufacturers.”

“Small and medium enterprises are also showing interest in contract manufacturing, seeking to integrate themselves into broader supply chains. This trend signals a growing ecosystem where even niche players can secure a foothold,” he added.

However, the key challenge remains a mindset shift. Traditional industry players often resist adopting technology-driven solutions, preferring conventional methods. Yet, once convinced, they integrate seamlessly, underscoring the importance of strategic engagement. The availability of skilled resources is less of a bottleneck, given the emergence of hire-train-deploy models that ensure workforce readiness.

“In an increasingly competitive landscape, transparency and trust emerge as the defining factors for success. Companies that establish credibility and deliver on performance expectations will secure long-term partnerships and growth,” said Ramesh.

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German leading mechanical and plant engineering firm Durr has announced that it has been selected to equip Volvo Cars' manufacturing facility in Košice, Slovakia, with final assembly automation technology.

The plant represents the automaker's dedicated facility for all-electric vehicles and is planned to commence production in 2027 with a maximum annual output capacity of 250,000 units.

As per the understanding, Durr will supply turnkey conveyor, fluid filling and testing infrastructure integrated through its NEXT.assembly framework. The installation features fluid filling equipment configured to handle low-conductivity coolants and updated air conditioning refrigerants designed to comply with European regulatory changes. The vehicle conveyance network spans over three kilometres within the facility, utilising electric monorail systems, skillet platforms and modular chain conveyors to transport vehicle bodies and door components between assembly stations.

For end-of-line testing and quality control, Durr is installing its x-wheel chassis alignment system equipped with x-3Dsurface optical sensors, alongside the x-light camera-based measurement system for inspecting and adjusting headlamp modules in accordance with ECE and SAE standards.

Jorg Neumann, Director of the End of Line Product Line, Durr in Germany, said, “Volvo Cars has exceptionally high standards when it comes to measurement accuracy. We are very familiar with these standards, as Dürr equips all Volvo sites worldwide with vehicle geometry and headlight alignment technology.”

Andreas Hohmann, CEO of Durr Italy and Vice-President of NEXT.assembly, said, “Our fully automated final assembly system represents a significant advancement in automotive manufacturing, combining precision engineering with cutting-edge automation to deliver exceptional quality and efficiency.”

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Mumbai-headquartered automotive major Mahindra & Mahindra is moving towards taking possession of an initial package of approximately 800 acres for an automobile and tractor manufacturing facility at Additional Butibori in Nagpur, Maharashtra.

The site forms part of a planned 1,500-acre development in Vidarbha, which will be accompanied by a 150-acre supplier park in Sambhajinagar.

When fully operational, the site will feature an annual production capacity exceeding 500,000 vehicles and 100,000 tractors. The Sambhajinagar supplier park will provide components to the Nagpur facility and to Mahindra's existing production plants in Chakan and Nashik.

Furthermore, Mahindra is also establishing training frameworks to identify and develop workforce capabilities for manufacturing across powertrains and technologies. Over the next two to three years, existing associates will be considered through a selection process to fill roles at the facility based on technical capability, performance and alignment with company standards.

Mahindra also plans to establish a training centre in Nagpur to build technical skills in areas including mechanical operations, welding and painting. Further operational details regarding workforce requirements and recruitment processes will be released as project development continues.

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Czech automaker Skoda Auto is marking the 30th anniversary of the modern-generation Octavia, which first entered production on 3 September 1996. The model has served as the carmaker's core product following its integration into the Volkswagen Group, reaching total production of almost 7.9 million units across four generations. At present, the Skoda Octavia is manufactured in Mladá Boleslav and Kvasiny in the Czech Republic, as well as Kostanay in Kazakhstan.

Klaus Zellmer, CEO, Skoda Auto, said, "The Octavia has been an icon of the Skoda brand for three decades. As Combi or Liftback, it has consistently delivered what customers prefer: outstanding space, practicality, safety, and features at an exceptional value. In many ways, the Octavia defined the Skoda ambition to offer more than expected. This has resulted in the Octavia powering our international growth by earning the trust of generations of customers. While Skoda continues to evolve and expand into new segments, the Octavia remains a powerful symbol of customer-centric innovation and Simply Clever thinking."

The Skoda Octavia’s development began in 1992 under design chief Dirk van Braeckel, reviving a nameplate originally used by Skoda between 1959 and 1971. The initial liftback variant launched with a 528-litre boot capacity, supported by a production plant in Mlada Boleslav that increased the site's annual vehicle capacity from 90,000 to 350,000 units.

A Combi estate version joined the line-up in 1998, followed by an all-wheel-drive variant in 1999 and the first Octavia RS in 2000. The first generation recorded 1.44 million total unit sales before ending production in 2010.

The second-generation Octavia debuted in 2004, introducing dual-clutch transmission options and expanding boot capacity by 32 litres, achieving 2.6 million sales prior to its replacement in 2013. The third generation, manufactured from 2012 to 2020, incorporated revised driver assistance systems, reduced body weight, and efficiency updates, alongside an exterior facelift in 2017.

The current fourth-generation Octavia launched in November 2019 in liftback and Combi formats. An update introduced in early 2024 added safety equipment, including up to ten airbags and revised driver fatigue monitoring software, as the vehicle continues to serve commercial and private markets globally.

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Maruti Suzuki India, the country’s largest passenger vehicle manufacturer, has announced its automobile rake reached Pollachi Railway Terminal in Tamil Nadu, making it the first passenger vehicle manufacturer to dispatch vehicles by rail to the terminal.

The rake carried 120 vehicles, including Wagon R, Ertiga, Dzire and Celerio models, and departed from the Manesar in-plant railway siding on 18 August 2026.

Maruti Suzuki worked with Indian Railways to operationalise Pollachi Railway Terminal for rail-based vehicle dispatches. The location adds a destination in Southern India alongside Coimbatore.

The terminal enhances the ability of the company to serve customers across the region ahead of the Onam festival in Keralam. The facility can support 70 automobile rakes annually, enabling the delivery of 11,000 vehicles each year through railways.

Interestingly, the manufacturer adopted rail-based vehicle dispatches during FY 2014-15 to reduce CO2 emissions, fuel consumption and road congestion. The company increased the share of rail in outbound vehicle dispatches from 5 percent in FY 2014-15 to 26.5 percent in FY 2025-26, dispatching 3.2 million vehicles cumulatively via rail networks to date.

Maruti Suzuki India aims to increase the share of rail-based vehicle dispatches to 35 percent by FY 2030-31 to reinforce commitments to rail logistics.

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