2025 advancer: Under the shadow of slowdown, India’s auto industry eyes eco-friendly sustainability

Traversing from being just vehicle manufacturers to mobility solutions providers amid a raging debate over which eco-friendly technology must be incentivised, the Indian automobile industry is driving in the new year under the shadow of a slowdown in sales with the post-pandemic pent-up demand in distant memory.

The shift in the auto industry – where advanced technologies like autonomous driving, vehicle intelligence, connected features and electrification are quickly gaining traction – will be reflected in the upcoming Bharat Mobility Global Expo in which India’s flagship Auto Expo has been clubbed to be held from January 17-22, 2025 in Delhi-NCR.

With India making its presence felt in the global automotive landscape, automakers are expected to showcase their new models with varied powertrain technologies across multiple price points, catering to different sets of customers at the expo as the adoption of environment-friendly cars is slated to gather pace in 2025.

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While electric vehicles remain at the forefront of the journey towards sustainable mobility, the industry, especially the passenger vehicles (PV) segment, is witnessing louder calls for supporting other technologies like strong hybrids, biofuels, and biogas, besides CNG.

However, for consumers, buying a new car or an SUV in 2025 will become an expensive proposition as all the manufacturers, from mass market to luxury, have decided to hike prices from January to partially offset rising input costs.

“India is now achieving a global scale. We see immense potential in the long-term growth of the Indian automobile industry,” Maruti Suzuki India MD and CEO Hisashi Takeuchi told PTI.

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The car market leader is looking for accelerated growth in the coming years.

“As we embark on the next phase of our growth journey from 2 million to 4 million capacity, we plan to achieve in the next 7-8 years what we accomplished in the last 40 years,” he noted.

As for 2025, he said the company is looking forward with “immense enthusiasm” to the new year as it gears up to foray into the battery electric vehicle (BEV) segment with the unveiling of eVITARA, a global model manufactured in India for the world.

Takeuchi, however, said along with BEVs, Maruti Suzuki India will advance its efforts towards a carbon-neutral society through a multi-pathway approach, including hybrids, CNG, and carbon-neutral fuels like ethanol and biogas.

Homegrown Tata Motors, the current leader in electric mobility in the PV segment, is looking to double down on its sustainable mobility drive.

“Tata Motors is in a strong position to make the most of key shifts in the industry, from the growing demand for greener, emission-friendly powertrains to safer cars and SUVs,” Tata Motors Passenger Vehicles MD Shailesh Chandra said, adding that the company remains optimistic about the growth of the Indian passenger vehicle market in 2025.

Further, he said, “In the EV space, we are focused on strengthening our leadership while tapping into the rising opportunities. At the same time, we will stay committed to enhancing customer satisfaction and delivering an exceptional experience at every touchpoint of their journey with us”.

JSW MG Motor India Chief Commercial Officer Satinder Singh Bajwa said the company aims to make the EV segment more attractive and accessible and will seek to play a crucial role in driving India towards becoming the top global automobile market.

“With a significant shift towards electric vehicles, which is expected to grow by threefold in 2025, our focus on NEVs (new energy vehicles) will remain central to our business strategy to make the EV segment more attractive and accessible,” he noted.

Even as EVs remain at a sweet spot, with a GST rate of 5 per cent, according to Toyota Kirloskar Motor Executive Vice President and Country Head Vikram Gulati, other eco-friendly technologies must also be considered for proportionate tax incentives.

“Technology is only a means to achieving the end… You should be supporting all of those technologies in a proportionate manner, to the extent they deliver on societal goals…It can be a hybrid. It can be a plug-in (hybrid). It can be ethanol, it can be CBG (compressed biogas), it can be anything, as long as it meets your goals, it needs to be supported and in a fair, transparent manner,” he noted.

As sustainable mobility remains an imperative, Kia India Managing Director and CEO Gwanggu Lee said in India, “there are so many alternatives, and it is not only electrification”, which, however, has undoubtedly been a big wave.

Hybrids, CNG, and alternative fuels like ethanol are technologies that can be considered, he said, adding that as for Kia, being a global brand, it will have to adapt when the market changes in terms of technology.

Nonetheless, in the luxury segment, according to market leader Mercedes-Benz India, 2024 has been the best year ever for BEV transition, with the company selling over 800 units in the January-September period, having a penetration of 6 per cent and a growth of 80 per cent.

“We expect to continue this BEV adoption in 2025 as well, with new BEVs lined up for launches like the EQS SUV 450 5-Seater and the electric G-Class. We expect BEV adoption to accelerate with more launches and availability of a wider portfolio for customers to choose from,” Mercedes-Benz India MD and CEO Santosh Iyer stated.

Going by the current macros, the company expects a steady 2025 owing to a favourable business climate, steady earnings and positive consumer sentiments, all reflecting in increased consumption, he added.

Expressing similar views, Audi India Head Balbir Singh Dhillon said, “Regarding the overall luxury EV segment - it shows medium to long-term potential. With a growing base of high-net-worth individuals and eco-conscious consumers, there is a strong demand for premium products that align with environmental values”.

Looking back, 2024 was a year when the PV makers hit speed breakers in sales as the post-pandemic pent-up demand evaporated and the high base of the previous year demanded more effort to make sales grow. The urban market softened even as the rural market helped both entry-level small cars and two-wheelers gain traction.

Reflecting on the year gone by, Takeuchi noted that despite several challenges, the company, for the first time, exceeded the 20 lakh production output milestone in a year, “a feat achieved by no other Indian passenger vehicle manufacturer”.

Commenting on the year gone by, SIAM Director General Rajesh Menon said the passenger vehicle segment continued its steady performance led by sustained demand for SUV segments and good adoption of new energy vehicles, such as electrics, hybrids and gaseous fuel vehicles.

The auto industry also made significant strides to introduce newer models and vehicles with alternative power trains like hybrids, electrics, ethanol/flex-fuel vehicles and CNG in 2024, he added.

Menon hoped that the newly launched PM E-DRIVE Scheme and PM E-SEWA scheme would ensure wider penetration of electric mobility in the country.

As for the automotive component industry, the sector continues to invest in localisation, R&D, digitisation, and sustainability, according to Automotive Component Manufacturers Association (ACMA) President Shradha Suri Marwah.

“There remains a pressing need to further strengthen our focus on innovation, global competitiveness and designing in India for the world,” she added.

Marwah noted that despite global economic uncertainties and changes in the dynamics of vehicle demand, the component industry has shown resilience and adaptability, registering steady growth in both domestic and external markets.