Shifting Gears: The Evolving Dynamics Of India's Mobility Sector Contributing 7.1 per cent to India's GDP and 49 per cent of the manufacturing GDP, the country's automobile sector is one of the fastest growing in the world.

Contributing 7.1 per cent to India's GDP and 49 per cent of the manufacturing GDP, the country's automobile sector is one of the fastest growing in the world. India is also home to the fourth-largest automobile market globally and is expected to be the third-largest in terms of sales volume by FY26. While the industry was at the forefront of disruption during the pandemic, it has bounced back gradually. With India's renewed focus on reducing carbon emissions post the United Nations Framework Convention on Climate Change (COP 27 Summit), the automobile sector has evolved rapidly, going through ebbs and flows in a short period.

Today, after a rollercoaster ride, the mobility segment has radically changed compared to just half a decade ago. It's no surprise that 2022 was the revival year for businesses across verticals, and the mobility sector is no exception. It was a crucial year filled with evolution, learning, and growth for the industry, which plays an undeniably instrumental role in our lives. Here's how the dynamics of the industry have evolved on all fronts.

The rise of EVs

Electric vehicles (EVs) aren't a new concept. In fact, practical electric vehicles have been around for over 150 years, i.e., since the 1870s. However, it is over the past decade that EVs have become gradually more popular. Especially with the looming threat of climate change and global warming, people are becoming more conscious about their lifestyle and its impact on our planet.

As one of the major causes of air pollution in the country, vehicle emissions contribute to 20-30 per cent of particulate matter at the breathing level of air quality. Additionally, around 8% of the Greenhouse Gas Emissions are from the transport sector, and passenger vehicles make up for about 45% of the CO2. All this results in poor air quality, which not only impacts breathability and our health but also pollutes the planet. These alarming facts have urged consumers to lean towards EVs and the government to promote them.

In October 2021, the Indian government set a target that by 2030, 30 per cent of all vehicles on Indian roads must be electric. From the economic perspective, if EVs expand to 40% in the two-wheeler and four-wheeler segments and 100% in buses, India will be able to reduce crude oil consumption by a whopping 156 million tonnes worth INR 3.5 lakh crore. To ensure we achieve the target, the government is aggressively ramping up EV infrastructure and even offering subsidies to players in the EV segment and consumers purchasing EVs through the introduction of schemes like FAME India (Faster Adoption and Manufacturing of Hybrid and Electric Vehicles).

All these have facilitated greater EV adoption across the country, and although EV infrastructure in the country still has a long way to go, it has improved by leaps and bounds in a short period. To put things in perspective, 2022 saw the registration of almost double the number of EVs compared to 2021. Between April and June 2022, India saw a 68 per cent increase in EV adoption, receiving much-needed validation from consumers. Today, EVs have become increasingly common on our roads, and the segment will likely continue to gain momentum over the next few years.

Steering towards car rental/shared mobility

While per capita income and purchasing capacity have increased over the years, with people now having more disposable income, their fundamental ideology of owning a car has evolved. Owning a car can be an incredible thing, but it certainly comes with its share of setbacks. For instance, it comes with additional costs and restricted portability. The insurance premiums and maintenance costs have soared, not to mention the commitment one will need to give to a car for a minimum of 4-5 years.

Besides, with the pandemic making people apprehensive about public transportation, road travel has become increasingly popular, with consumers looking for self-drive options. This is where the rental car segment comes into the picture. Projected to reach a revenue of USD 2.63 billion in 2023, India's car rental segment is witnessing a boom.

Equipped with state-of-the-art technologies like keyless entry systems and safety features, rental cars offer consumers a sense of ownership without the commitment aspect.

Connected mobility is the future

Just as it is for other sectors, technology is one of the crucial aspects powering the mobility sector. It has permeated deep into the industry, with connected mobility gaining traction. While connectivity remained restricted to smartphones and infotainment systems in cars, the seamlessness and convenience it offers have made it hugely popular among consumers. To cater to their expectations, industry players are increasingly integrating technologies like AI, Blockchain, IoT, and 5G to provide customized services. These technologies will also be crucial when it comes to offering safety, one of the factors that consumers consider while leasing/buying a car. In a nutshell, connected mobility is the future of the industry, and will likely see a surge in connected cars.

Bottomline

The mobility industry has leapfrogged to an extent that would have been almost unimaginable a decade ago. We can expect more policy reforms and bolstered infrastructure in the sector, contributing further to its growth.