India’s auto sector is buckling up for a ride where the GPS hasn’t quite figured out all the detours yet. From EVs to AI-driven decisions, the market is navigating both familiar roads and uncharted territories, as mapped out in a Boston Consulting Group (BCG) and Google India report. According to the report, India’s automotive industry, the third-largest in the world, is navigating a pivotal transformation. From emerging technologies to evolving consumer behaviour, the sector is poised for an exciting future. The report sheds light on this evolving landscape, providing insights that promise to reshape the future of mobility. Here’s a look at the key trends, challenges, and opportunities in India’s automotive journey.
Emerging profit pools: A fusion of old and new
In conversation with BrandWagon Online, Natarajan Sankar, Managing Director and Partner at BCG, emphasised India’s unique position in the global auto market. “India is one of the few markets where both emerging and traditional profit pools are flourishing,” he said. While electric vehicles (EVs) are making waves, traditional internal combustion engine (ICE) vehicles still hold a substantial share of the market. Sankar pointed out, “EV penetration in four-wheelers stands at about 5%, while two-wheelers are slightly ahead. Yet, consumer consideration for EVs is much higher than actual purchase rates, with one in three consumers considering at least one EV in their choice set. This gap indicates a strong potential for growth that automakers need to tap into by offering better value propositions and expanding infrastructure.”
India’s automotive market reflects a rare blend of growth in old and new technologies. EVs, on-demand mobility services, and ICE vehicles represent the various growth areas that are fueling this shift, along with the evolving role of consumers in the decision-making process.
Women driving change in car-buying decisions
Historically, car-buying decisions were male-dominated. However, a significant shift is taking place. “Women today are no longer passive participants in the decision-making process. In almost 52% of households, the second vehicle—often an EV—is primarily driven by women,” Deepti Matai, Head of Industry – Auto, Google India, highlighted. This shift in the household dynamic is driving the adoption of EVs and influencing purchase decisions. Women are increasingly shaping the outcome of vehicle purchases, especially in households with more than one car.
As women play a more prominent role in vehicle decisions, factors like design, colour, and features are becoming increasingly important, with women often prioritising practicality and day-to-day usability in cars.
Gen Z: The game-changers in car buying
Gen Z is reshaping the car-buying journey. “They are highly inclined towards extended test drives and self-drive rentals before making a purchase,” Monil Modi, Partner at BCG, said. “This behaviour is 2.7 times more pronounced than in other consumer cohorts.” Unlike previous generations, Gen Z sees car ownership as more than just a necessity; it’s an experience. As digital natives, they expect personalised experiences and increasingly rely on artificial intelligence (AI) to address concerns like range anxiety in EVs, as well as to enhance their overall experience.
Automakers are adjusting their strategies to meet the demands of Gen Z consumers, who not only want a car that serves their practical needs but also aligns with their lifestyle and values. AI is playing a transformative role in personalising customer experiences, providing solutions like real-time battery insights and predictive maintenance for EVs.
From mass ads to personalisation
The days of one-size-fits-all marketing are long gone. Bhaskar Ramesh, Director of Omni-Channel Businesses at Google India, explained how marketing is evolving. “Today, 40-50% of consumer watch time is spent on short-form content,” he noted. “Brands must craft personalised ads for digital platforms, TV, and social media to capture consumers’ attention effectively.”
The shift toward hyper-personalisation is essential, with AI and data becoming central to crafting relevant messages for diverse consumer segments. From design to safety features, car buyers now expect targeted marketing that speaks directly to their preferences. AI is enabling this level of personalisation, which is transforming how brands interact with their audience at every touchpoint.
The EV challenge: Building the infrastructure
Despite the optimism surrounding EVs, several barriers remain, primarily around charging infrastructure. “The government and private players must collaborate to build a robust charging ecosystem,” stated Matai. Charging stations are few and far between, and many consumers are unsure about the reliability and availability of these stations. The solution lies in creating a seamless experience, from real-time updates on charging station availability to integrated apps for booking slots and navigating the best routes.
The road ahead: A $612 billion opportunity by 2030
India’s automotive sector is valued at $300 billion today, but it is projected to reach over $612 billion by 2030. Modi emphasised that this growth is not just about selling more vehicles but about reimagining mobility itself. “The focus is shifting from being product-centric to consumer-centric, data-driven, and intelligent decision-making,” he said. “The future of the automotive industry in India lies in leveraging AI, adapting to evolving family dynamics, and creating a customer-centric ecosystem.”
As the Indian auto industry adapts to global trends while maintaining its unique identity, it’s clear that the future is not just about cars, but about how mobility solutions fit into people’s lives. “One of the key challenges and gaps in automotive advertising today is the lack of focus on validating lead quality. Advertisers need to prioritise this to safeguard their sales pipeline from junk leads, ensure ad budgets are optimised, and allocate resources effectively. By addressing this gap, brands can unlock greater efficiency and drive more meaningful results,” Amit Relan, co-founder and CEO, mFilterIt, said.
AI and Data!
AI will be a central force in shaping the future of India’s automotive market. From improving driving experiences to personalising marketing strategies, AI is unlocking new value pools and opportunities. However, the auto industry is still lagging behind in leveraging AI to its full potential. According to Manta, automakers need to rethink their approach to targeting cohorts like women and Gen Z, utilising data to deliver more personalised experiences.
Ramesh also highlighted the importance of data consolidation, saying, “OEMs have tremendous data about their customers, but it has traditionally been fragmented. By creating a unified view, automakers can personalise offerings and enhance relationships with existing customers.” The industry is moving toward ecosystem building, where partnerships and collaborations are the key to driving innovation and growth.
A thrilling ride ahead
The Indian automotive market is undergoing a rapid transformation, driven by emerging technologies, shifting consumer behaviours, and the growing influence of AI. With women playing a larger role in purchasing decisions, Gen Z consumers redefining car ownership, and AI powering personalisation and efficiency, the road ahead promises to be both exciting and challenging. As the sector adapts to these changes, automakers and consumers alike must buckle up for a thrilling journey into the future of mobility.