Outlook 2022: What you can expect from the Indian auto industry this year

As we enter the third straight year of the pandemic, and still in the midst of another wave of COVID19, the Indian auto industry has proved itself to be exceptionally resilient again. Considering the industry was already in its worst slump in decades when the pandemic first hit in 2020, carmakers have been able to use this sudden demand for personal transport to their advantage very well. This despite the waves of lockdowns and a serious semiconductor crunch that has led to production schedules and launch timelines going haywire. Despite these challenges, car sales grew by 27 per cent in India in 2021. This was only the third time that sales had crossed the 30 lakh mark in a year, the last time this happened was in the boom period of 2018.

SUVs to remain dominant

So what can we expect from the Indian auto industry in 2022? The Omicron variant and with the semiconductor shortage showing no signs of abating, it's going to be another year of automakers rising to the challenge. Maruti Suzuki echoes a similar sentiment, the country's largest carmaker has bled market share as rivals like Tata Motors and new entrants like Kia, MG and a resurgent VW Group have lured buyers away from the brand. The company is set to address this by significantly revamping its entire line-up and return focus to the SUV market. Shashank Srivastava, head of marketing and sales at the firm says, "In FY 20-21, We witnessed the emerging trend of increased interest in SUVs and hatchbacks. The SUV segment grew to 32% and is doing remarkably well. Whereas hatchbacks remain the more favourable segment with nearly 47% of the market. Our indication is that SUV trend will continue in 2022, while hatchbacks maintain their dominance."

CNG resurgence

Another growing trend to look out for in 2022 will be the resurgent CNG car market, in the Indian context only 5 per cent of car buyers think their next car will be an EV as per a Deloitte report. This means that CNG continues as a cost-effective and widely accepted measure to ease the burden of high fuel costs. Tata Motors has entered this segment just this month, so far largely dominated by Maruti Suzuki and Hyundai, and if the rush of launches here in January are any indication, expect to see carmakers bolster their CNG range significantly over the next year.

Year of EV consolidation

That's not to say electrification is set to take a back seat in India. In fact, 2022 could be a year of consolidation before a big boom 2023 onwards when Maruti Suzuki, Hyundai, MG Motor and Mahindra are set to enter this segment in earnest with sub-15 lakh options. Until then, Tata Motors will be the dominant player. The company is set to roll out 10 new EVs in the next five years and expects to sell 50,000 of these cars a year by 2023. In fact, this push towards electrification has played a significant role in the homegrown brand's recent success.

Launches galore

Since the slump of 2019, carmakers have been quick to realize that if buyers aren't ready to buy cars, a good idea is to draw them into showrooms with shiny new metal. Consequently, both mainstream and luxury brands have made it a habit of a steady stream launches to keep interests high. This strategy has worked as the sales numbers suggest, and there's more of it in 2022. Skoda India has already promised six new models and Mercedes-Benz 10 new cars for 2022 and more carmakers will definitely follow suit.

Chip crisis 2.0

And this is a commendable achievement in the face of the semiconductor crisis, which isn't expected to die down well into 2022. Tata Motors, with its largely localized and relatively small-scale supply chains is a good example of how carmakers have streamlined production and focused on popular models to tide over this shortage, some better than others. A spokesperson from Tata Motors says, "We are taking definitive actions in the near term to mitigate the effects of the said supply chain impediments through an agile, multi-pronged approach to address supply bottlenecks and drive our savings program that much more efficiently."

As it stands, unless a crippling new wave of the pandemic brings forth a repeat of 2020, the auto industry in India seems set for another good showing in 2022.

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