The automobile component companies are adding wings to the wheels of the industry. As global dynamics and alliances are shifting, manufacturers of components are sensing the opportunity to be the preferred choice for global automobile giants. Consumers are increasingly choosing electric vehicles, and two-wheeler EVs are the preferred choice. Software is moving into the heart of smart vehicles. India is also consolidating its position as the third largest automobile market, behind China and USA. The big jump in growth could be just around the corner.
Electrification, shared mobility, embedded software and the spread of connected vehicles are each expanding at different speeds. The industry is going through disruption, and, as India looks to leverage the opportunity. The opportunities generated by the disruption can change the competitive game for players willing to expand their business and engage with customers in the digital environment. The message to automobile companies could be – win in India, win for the world.
Every segment of the market is revving up, making the market red hot. With 500 million people expected to live in urban locations by 2030, electric vehicles could turn to be the choice. Improved income could add between 60-100 million people to the consuming class. That segment could purchase cars or graduate from two-wheelers to cars.
Policymakers are hoping to drive the opportunity to help build a USD 300 billion industry focused on electric mobility, with a near 7X jump in exports. The additional manufacturing heft could add an estimated 60-70 million direct and indirect jobs.
Exports: Chip, zap, zoom!A shortage of chips for cars had impacted car sales during the pandemic years. While the overall numbers may have been flat over five years to 2023-24, passenger vehicle exports are back to pre-pandemic levels. With the chip shortage over, exports are now ready to take off. Several Indian and global automobile manufacturers are using their India units for component supplies to the world.
North America accounts for 32% of exports, grew 4.5% during 2023-24. Exports to Europe, which account for 33%, saw a healthy 12% growth through the year while Asia remained flat. Among the key components that India exports include drive transmission & steering, engine components, body & chassis, suspension & braking systems.
While intelligence is at the core of each vehicle, each component for the EV will have to have its role in the ecosystem for the Internet of Things. With India’s core technology services strength, Indian companies have more than a foot in the door for the industry. With the pronounced ESG lens, the need for sustainability and circularity had never been felt as strongly. With the 4.5 million vehicles that India manufactures, the numbers could be multiplied rapidly, and component manufacturers have to more than gear up.
Software on wheels
The intelligence in automobiles is making all the difference in the vehicles of tomorrow. Features for driving assistance, connectivity and infotainment product systems –manufacturers of these components are expected to redefine vehicles in the coming years. The hardware for vehicles are expected to get standardised after electrification expands while software could become the difference. This emerging opportunity plays to what has now been globally accepted as India’s core competence – software code for technology solutions across industries.
As more software-oriented systems in automobiles will be required to process, manage and distribute the vast amounts of generated data, for the manufacturers of automobile components it could engender opportunities for new age services. It could also throw open the market for new companies with a different expertise than the existing component manufacturers. For the internet of things (IoT) ecosystem, real time and secure communication between the in-vehicle embedded electronic systems, between vehicles, and between vehicles and infrastructure are essential parts of the assisted and autonomous driving ecosystem. ADAS and intelligent connectivity systems generate high demand for computing speed and data processing as vehicles integrate data from a growing number of in-vehicle electronic control units.
Ultimately, with enhanced automation there will be need for more hardware. That, in turn, will demand increased software processing and customised software development. For the ecosystem to run smoothly, robust and fail-safe data processing is mandatory.
Sustainability at the core
India is heading towards a low-carbon economy and for the ultimate goal of net zero by 2070. By 2030, GoI plans to achieve EV sales penetration of 40% for buses, 30% for private cars, 70% for commercial vehicles, and 80% for two- and three-wheelers. At least 25 of India’s states have their own EV policies.
Meeting the global standards for ESG compliance is critical for Indian products to find their markets anywhere in the world. Sustainable supply chains will have to be built on the principles of recycling and reuse, which demands more transparency across the supply chain. The push for reuse will naturally make the supply chain more resilient than in the past. Car dealerships could play a critical role with consumers about energy decarbonisation, material circularity and lifetime optimisation, taking the message home to consumers.
The industry is ready to shift to top gear as the Bharat Mobility Global Expo 2025 revs up from January 18-21 at Yashobhoomi in Dwarka, New Delhi. Everyone in the industry is expecting a change for the better of India!
