About the Automobile Sector
The automobile sector comprises companies that are engaged in the manufacture of motor vehicles and their components, including bodies and engines, but excluding batteries, tires and fuel. The key products of the industry are passenger automobiles, such as two-wheelers and four-wheelers, light trucks, commercial vehicles like delivery trucks, large transport trucks, etc.
The automobile sector plays an important role in macroeconomic expansion and technological advancement in India. In terms of volume, the two-wheeler segment plays a major role in the market due to a rise in the young and middle-class population in the country. In addition to this, companies also show interest in exploring rural markets, which further aids the growth of the sector. Now, looking into the commercial vehicles segment, the increase in logistics and passenger transportation industries is causing demand for these vehicles.
Future Outlook of the Automobile Sector in India
In 2021, the Indian passenger car market reached a value of US$ 32.70 billion, projected to grow at a CAGR of over 9% to reach US$ 54.84 billion by 2027. Simultaneously, the global electric vehicle (EV) market, valued at approximately US$ 250 billion in 2021, is expected to soar to US$ 1,318 billion by 2028. As of July 2023, the total production of vehicles, including passenger, three-wheelers, two-wheelers, and quadricycles, was 2.08 million units. The Indian EV market is anticipated to reach ₹50,000 crore (US$ 7.09 billion) by 2025. By 2030, the Government of India has committed that 30% of the new vehicle sales in the country will be electric. The Automotive Mission Plan 2016-26 is a mutual initiative by the Indian automotive industry and the Government to lay down the roadmap for the development of the industry.
Things To Consider Before Investing in the Automobile Sector
- Analyse the market demand: Analyse the current demand and trends in the automobile sector. Understand the demand for different types of vehicles. Consider factors such as consumer preferences, fuel efficiency, and emerging technologies. The market demand will boost sales for the companies, which can eventually generate profits.
- Regulatory environment: Stay informed about the regulatory landscape governing the automobile industry. Changes in emission standards, safety regulations, and government incentives for electric vehicles can significantly impact the sector.
- Technology and innovation: Assess the level of technological integration and innovation within companies. Advancements in electric vehicles, autonomous driving, and connectivity can influence a company's competitiveness.
- Environmental and social impact: Consider the environmental and social impact of the automobile sector. Increasing awareness of sustainability and corporate responsibility can influence consumer choices and regulatory decisions.
How To Invest in Automobile Stocks?
Investing in automobile stocks via Angel One is easy. Simply follow these steps:
- Log in to your Angel One account.
- Click on the search icon and look for your desired automobile stock.
- Now, place your buy order. Simply click on the ‘Buy’ button, enter your desired quantity, and select the order type.
- To complete your transaction, click on the ‘Buy’ button.
If you don’t have a Demat account with Angel One, you can open one for free online within minutes.
