By 2027, Automotive Market to Cross $18 Billion in India

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As per the latest research conducted by Counterpoint Research, India’s automotive electronic market is anticipated at $18 billion by 2027. It was $6 billion in 2020 and now it will grow with a CAGR of 17%. During this period, sales of automotive electronics will triple which will be driven by increasing income levels and customer preferences for in-vehicle digital experience.

Due to the COVID-19, the Indian automotive market has been facing a downfall. The overall sales for the automotive industry fell down to 26% annually in 2020. But it is expected to boost from this low point. The main driving force for this growth will be the increasing electrification across automotive mobility segments and the adoption of advanced connectivity experiences.

Soumen Mandal, a Research Analyst said, “Passenger vehicles are expected to capture nearly two-thirds of the Indian automotive electronics market driven by the rising usage of the telematics control unit (TCU), infotainment and other electronic components such as on-board diagnostics (OBD), electronic control unit (ECU) and anti-lock braking systems (ABS). Telematics penetration in India remains low compared to global standards. However, rising awareness among people about advanced safety and communication services, coupled with more embedded connectivity service offerings by automakers, will drive this market in the future. Head-up display (HUD), blind-spot monitoring system, auto-dimming mirror, advanced driver assistance systems (ADAS), and automatic transmission features remain mainstream features for premium segment cars (cars with an ex-showroom price of more than INR 1,100,000).

The average electronic component cost per passenger vehicle is projected to reach nearly INR 200,000 ($2,685) by 2027. Stringent regulations like Corporate Average Fuel Efficiency II (CAFE II) and Bharat Stage-VI (BS-VI) are also among the key drivers for rising electronic content in a car.

India’s two-wheeler market will also see growing adoption of automotive electronics. Electric vehicle (EV) penetration in the two-wheeler segment was 1.0% in 2020 but is estimated to climb to 15% by 2027, driven by favorable government policies like Faster Adoption and Manufacturing of Electric Vehicles II (FAME II) and rising consumer awareness of the green technology. This adoption is higher in the low-speed two-wheeler segment currently, but we expect it to increase in the high-speed segment in coming years.”

He added, “Embedded telematics and infotainment offerings are rare in three-wheelers considering this segment has the highest EV penetration among all vehicle categories. The electronics market in the commercial vehicle segment is projected to cross $530 million by 2027 due to the rising adoption of telematics and other new technologies like exhaust gas recirculation (EGR), selective catalytic reduction (SCR), and on-board diagnostics II (OBD II).  Automotive Industry Standard (AIS) 140 and rising awareness among stakeholders are benefiting telematics penetration in commercial vehicles.”

Customers are moving towards high price division, in the two-wheeler and passenger vehicle segments. The three-wheeler segment was the most affected following social distancing protocols. It is being said that electronics penetration for three-wheelers is slower than two-wheelers and passenger vehicles. Currently, Infotainment systems are available in premium buses but are limited to basic audio systems only. During the forecast, Infotainment systems are contemplated to grow in mid and high segments. In the infrastructure and last-mile delivery sectors, commercial vehicle sales are profiting from this growth.

“India’s automotive industry has been struggling since 2018. The BS-VI upgrade and COVID-19 further worsened the situation. Mass vaccination and normalcy in economic activities are expected to provide some relief to the industry. However, consumers remain cautious about the possibility of a third wave of COVID-19, something which is preventing them from spending much on vehicles,” said Brady Wang Associate Director.

“Digitization of cockpit, CAFE norms and EVs will drive the automotive electronics market in India. Touchscreen infotainment is also becoming popular in the passenger vehicle segment. However, the embedded infotainment market will remain negligible in the two-wheeler and three-wheeler segments,” he added.

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