In India, there's a growing desire for car ownership that's causing a significant increase in auto loans. This trend isn't limited to metropolitan cities alone, but also spreading to smaller cities. As car prices rise, consumers are choosing loans with longer repayment periods to make their purchases more affordable.

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Data collected by Jato Dynamics shows that major automobile manufacturers like Maruti Suzuki, Hyundai, Mahindra, Tata Motors, Honda, and Toyota anticipate finance penetration to increase from 64 to 75 per cent in the pre-pandemic era to 75 to 84 per cent in 2024. The statistics reveal that approximately 79.1 per cent of car purchases in India are financed through bank loans or non-banking financial companies (NBFCs). This shows the enduring status of cars as a symbol of social advancement in the world's most populous country.

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The inclination towards financing is particularly evident in tier II and III cities, where 75 per cent of buyers opt for loans. This indicates that the aspiration for car ownership has expanded beyond the boundaries of major cities, according to a high-ranking official at a South India-based NBFC.

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While traditional financing methods dominate the market, alternative models such as leasing and subscription services are struggling to gain a foothold in India. Leasing accounts for only 1.5 per cent of the market, while subscription services make up a mere 0.1 per cent. Experts attribute this lack of popularity to regulatory challenges, complicated logistics related to insurance and maintenance, and a cultural preference for outright ownership.

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A senior official at a prominent South India-based NBFC pointed out that the absence of GST benefits in leasing makes them hesitant to offer it to consumers. The official believes that leasing is more suitable for specialised leasing companies. In contrast to India, leasing comprises about half of new car sales in mature automotive markets like Europe. The leasing market is projected to grow by 4.5 per cent annually, reaching USD 12.17 billion between 2023 and 2028.

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Cash purchases still account for 19.3 per cent of total car deals, representing both affluent buyers and those unable to secure loans, according to experts.

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Auto dealers report that finance penetration is growing rapidly. Nikunj Sanghi, a prominent automotive dealer, stated that despite rising vehicle prices, consumers are now open to taking longer-term loans with minimal down payments. He added that the loan-to-vehicle ratio has significantly increased, now exceeding 85 per cent compared to 30 to 35 per cent previously.

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Ravi Bhatia, president of Jato Dynamics, suggests that the willingness to take on long-term debt for depreciating assets like cars indicates confidence in future earning potential and economic stability among Indian consumers.

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Financiers see great potential for auto loans in the upcoming festive period, which is crucial for consumer goods purchases. Banks and NBFCs are becoming more aggressive by offering competitive interest rates and faster documentation. Self-employed individuals particularly prefer loans, as they can invest their funds in their businesses where the return on investment often exceeds the interest cost, according to an official from a Mumbai-based bank that is a leading auto financier.

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With the second half of the calendar year expected to outperform the first half for vehicle financiers, Axis Capital predicts that Mahindra Finance will report a 1.9 per cent Return on Assets (RoA) for FY25. A comparison with Cholamandalam Investment &amp; Finance Company's vehicle finance on key metrics (Q1FY25) suggests that Mahindra Finance's business potential remains strong and should converge to better return ratios as growth accelerates.

In India, there's a growing desire for car ownership that's causing a significant increase in auto loans. This trend isn't limited to metropolitan cities alone, but also spreading to smaller cities.

In India, there's a growing desire for car ownership that's causing a significant increase in auto loans. This trend isn't limited to metropolitan cities alone, but also spreading to smaller cities. As car prices rise, consumers are choosing loans with longer repayment periods to make their purchases more affordable. Data collected by Jato Dynamics shows that major automobile manufacturers like Maruti Suzuki, Hyundai, Mahindra, Tata Motors, Honda, and Toyota anticipate finance penetration to increase from 64 to 75 per cent in the pre-pandemic era to 75 to 84 per cent in 2024. The statistics reveal that approximately 79.1 per cent of car purchases in India are financed through bank loans or non-banking financial companies (NBFCs). This shows the enduring status of cars as a symbol of social advancement in the world's most populous country. The inclination towards financing is particularly evident in tier II and III cities, where 75 per cent of buyers opt for loans. This indicates that the aspiration for car ownership has expanded beyond the boundaries of major cities, according to a high-ranking official at a South India-based NBFC. While traditional financing methods dominate the market, alternative models such as leasing and subscription services are struggling to gain a foothold in India. Leasing accounts for only 1.5 per cent of the market, while subscription services make up a mere 0.1 per cent. Experts attribute this lack of popularity to regulatory challenges, complicated logistics related to insurance and maintenance, and a cultural preference for outright ownership. A senior official at a prominent South India-based NBFC pointed out that the absence of GST benefits in leasing makes them hesitant to offer it to consumers. The official believes that leasing is more suitable for specialised leasing companies. In contrast to India, leasing comprises about half of new car sales in mature automotive markets like Europe. The leasing market is projected to grow by 4.5 per cent annually, reaching USD 12.17 billion between 2023 and 2028. Cash purchases still account for 19.3 per cent of total car deals, representing both affluent buyers and those unable to secure loans, according to experts. Auto dealers report that finance penetration is growing rapidly. Nikunj Sanghi, a prominent automotive dealer, stated that despite rising vehicle prices, consumers are now open to taking longer-term loans with minimal down payments. He added that the loan-to-vehicle ratio has significantly increased, now exceeding 85 per cent compared to 30 to 35 per cent previously. Ravi Bhatia, president of Jato Dynamics, suggests that the willingness to take on long-term debt for depreciating assets like cars indicates confidence in future earning potential and economic stability among Indian consumers. Financiers see great potential for auto loans in the upcoming festive period, which is crucial for consumer goods purchases. Banks and NBFCs are becoming more aggressive by offering competitive interest rates and faster documentation. Self-employed individuals particularly prefer loans, as they can invest their funds in their businesses where the return on investment often exceeds the interest cost, according to an official from a Mumbai-based bank that is a leading auto financier. With the second half of the calendar year expected to outperform the first half for vehicle financiers, Axis Capital predicts that Mahindra Finance will report a 1.9 per cent Return on Assets (RoA) for FY25. A comparison with Cholamandalam Investment & Finance Company's vehicle finance on key metrics (Q1FY25) suggests that Mahindra Finance's business potential remains strong and should converge to better return ratios as growth accelerates.

Indian small towns go big on auto financing

The Indian automotive sector has achieved a significant milestone, surpassing the INR 20 lakh crore mark in revenue for the fiscal year 2024, as announced by Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), on Monday, September 9, 2024. This impressive figure translates to approximately USD 240 billion, highlighting the industry's substantial economic impact. The sector now accounts for 14-15 per cent of the total Goods and Services Tax (GST) collected in India, underscoring its pivotal role in the country's fiscal health.

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Aggarwal, speaking at the 64th annual session of the Automotive Component Manufacturers Association (ACMA), emphasized that the automotive industry's contribution extends beyond financial metrics. It plays a crucial role in generating both direct and indirect employment opportunities across the nation. Currently contributing around 6.8 per cent to India's Gross Domestic Product (GDP), Aggarwal expressed confidence that this percentage is set to increase in the coming years.

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The growth of the Indian automotive sector is not merely quantitative but also qualitative, with significant advancements in technology. On the global stage, India has solidified its position as a major player in the automotive market. It now ranks as the third-largest market for passenger vehicles, leads in two and three-wheeler sales, and holds the third position in the commercial vehicle segment. This progress aligns with India's vision of becoming a developed nation, or "Viksit Bharat," by 2047.

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Looking ahead, Aggarwal projects even faster growth for the automotive industry, anticipating it to be a key driver of India's economic development. In a strategic move to reduce import dependence, the industry has identified 50 critical components for local production. This initiative is part of a broader effort to enhance indigenous manufacturing capabilities.

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SIAM, in collaboration with ACMA, has set ambitious targets for increasing localization. The industry committed to reducing import content from 60 per cent to 20 per cent by 2025, using the 2019-20 levels as a baseline. This effort aims to decrease imports by INR 20,000 to INR 25,000 crore over five years. Aggarwal reported that the first phase of this import reduction plan has been successfully achieved, with a 5.8 per cent decrease in the first two years.

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The focus on local manufacturing extends to high-tech, critical components that have traditionally been imported. ACMA members are being encouraged to start producing these items in India, enabling vehicle Original Equipment Manufacturers (OEMs) to source them locally. Given that many of these components are electrical or electronic, there's a recognised need to develop specialized capabilities and capacities within India for these advanced items.

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The Indian automotive industry is not only excelling in conventional internal combustion engine technologies but is also making strides in alternative power trains. It has developed strong capabilities in multiple areas, including CNG, electric vehicles, and hybrids.

The industry is actively working on hydrogen and fuel cell-based technologies, demonstrating its commitment to innovation and sustainability.

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Aggarwal emphasised the industry's future focus on cleaner and safer vehicles, aligning with the country's growing aspirations. He also expressed gratitude to the Ministry of Heavy Industries for initiating the development of the third Automotive Mission Plan, which will cover the period from 2024 to 2047. This plan will outline the industry's growth trajectory in three distinct phases: from now to 2030, 2030 to 2037, and finally, 2037 to 2047.

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The Automotive Mission Plan is expected to serve as a crucial guiding document for the entire automobile and auto component industry. It will assist in planning investments and act as a reference for various government ministries and state governments in formulating policies aligned with the auto sector's growth and research needs.

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ACMA President Shradha Suri Marwah, also speaking at the session, highlighted some of the challenges facing the industry. These include addressing the skill gap and maintaining international quality standards. Marwah stressed the importance of collaboration with educational institutions and investment in skill development to overcome these challenges. She also emphasized the need for industry collaboration, particularly in light of the growing demand for electronic components and semiconductor chips.

The Indian automotive sector has achieved a significant milestone, surpassing the INR 20 lakh crore mark in revenue for the fiscal year 2024, as announced by Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), on Monday, September 9, 2024.

The Indian automotive sector has achieved a significant milestone, surpassing the INR 20 lakh crore mark in revenue for the fiscal year 2024, as announced by Vinod Aggarwal, President of the Society of Indian Automobile Manufacturers (SIAM), on Monday, September 9, 2024. This impressive figure translates to approximately USD 240 billion, highlighting the industry's substantial economic impact. The sector now accounts for 14-15 per cent of the total Goods and Services Tax (GST) collected in India, underscoring its pivotal role in the country's fiscal health. Aggarwal, speaking at the 64th annual session of the Automotive Component Manufacturers Association (ACMA), emphasized that the automotive industry's contribution extends beyond financial metrics. It plays a crucial role in generating both direct and indirect employment opportunities across the nation. Currently contributing around 6.8 per cent to India's Gross Domestic Product (GDP), Aggarwal expressed confidence that this percentage is set to increase in the coming years. The growth of the Indian automotive sector is not merely quantitative but also qualitative, with significant advancements in technology. On the global stage, India has solidified its position as a major player in the automotive market. It now ranks as the third-largest market for passenger vehicles, leads in two and three-wheeler sales, and holds the third position in the commercial vehicle segment. This progress aligns with India's vision of becoming a developed nation, or "Viksit Bharat," by 2047. Looking ahead, Aggarwal projects even faster growth for the automotive industry, anticipating it to be a key driver of India's economic development. In a strategic move to reduce import dependence, the industry has identified 50 critical components for local production. This initiative is part of a broader effort to enhance indigenous manufacturing capabilities. SIAM, in collaboration with ACMA, has set ambitious targets for increasing localization. The industry committed to reducing import content from 60 per cent to 20 per cent by 2025, using the 2019-20 levels as a baseline. This effort aims to decrease imports by INR 20,000 to INR 25,000 crore over five years. Aggarwal reported that the first phase of this import reduction plan has been successfully achieved, with a 5.8 per cent decrease in the first two years. The focus on local manufacturing extends to high-tech, critical components that have traditionally been imported. ACMA members are being encouraged to start producing these items in India, enabling vehicle Original Equipment Manufacturers (OEMs) to source them locally. Given that many of these components are electrical or electronic, there's a recognised need to develop specialized capabilities and capacities within India for these advanced items. The Indian automotive industry is not only excelling in conventional internal combustion engine technologies but is also making strides in alternative power trains. It has developed strong capabilities in multiple areas, including CNG, electric vehicles, and hybrids. The industry is actively working on hydrogen and fuel cell-based technologies, demonstrating its commitment to innovation and sustainability. Aggarwal emphasised the industry's future focus on cleaner and safer vehicles, aligning with the country's growing aspirations. He also expressed gratitude to the Ministry of Heavy Industries for initiating the development of the third Automotive Mission Plan, which will cover the period from 2024 to 2047. This plan will outline the industry's growth trajectory in three distinct phases: from now to 2030, 2030 to 2037, and finally, 2037 to 2047. The Automotive Mission Plan is expected to serve as a crucial guiding document for the entire automobile and auto component industry. It will assist in planning investments and act as a reference for various government ministries and state governments in formulating policies aligned with the auto sector's growth and research needs. ACMA President Shradha Suri Marwah, also speaking at the session, highlighted some of the challenges facing the industry. These include addressing the skill gap and maintaining international quality standards. Marwah stressed the importance of collaboration with educational institutions and investment in skill development to overcome these challenges. She also emphasized the need for industry collaboration, particularly in light of the growing demand for electronic components and semiconductor chips.

Auto sector contributes nearly 15 per cent to total GST, says SIAM president

Cruise, the self-driving technology division of General Motors is planning to resume its fully autonomous ride services later in the current year, with intentions to begin charging fares for these services by the beginning of 2025, according to a report by Bloomberg News. This information comes from sources familiar with the company's plans.

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The San Francisco-based Cruise has been working diligently to recover from a significant setback that occurred last year. The incident involved one of their autonomous vehicles, which collided with a pedestrian and subsequently dragged her for a distance of 20 feet (approximately 6 meters).

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In April, Cruise recommenced operations in the United States, but with a limited fleet of vehicles operated by human drivers in Phoenix, Arizona. However, the company's authorisation to provide passenger services using autonomous vehicles in the state of California remains suspended following the accident.

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Industry analysts and experts in the field have noted that the development of autonomous driving systems and robo-taxis is likely to be a challenging, costly, and time-consuming process. This is due to the numerous engineering challenges and regulatory hurdles that need to be overcome before such technology can be widely implemented.

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A spokesperson for Cruise provided a statement regarding the company's current focus: "Our continued focus is on rebuilding trust with regulators and improving AV (autonomous vehicle) performance with supervised autonomous testing underway in Phoenix, Dallas and Houston." The spokesperson emphasized the company's commitment to safety, stating, "Safety remains our guiding principle for expanding into driverless, we do not have a timeline to share right now."

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Earlier this week, Cruise announced a shift in its development strategy. The company revealed that it would be concentrating its efforts on developing a next-generation Chevrolet Bolt vehicle, rather than proceeding with the previously planned Origin vehicle. The Origin was intended to be a fully autonomous vehicle without a steering wheel or pedals for human control.

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In the aftermath of last year's accident, Cruise has found itself subject to multiple investigations. These include inquiries from the National Highway Traffic Safety Administration, the U.S. Department of Justice, and the Securities and Exchange Commission. These investigations are likely to scrutinize the company's safety protocols, operational procedures, and compliance with relevant regulations.

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The company's plans to resume autonomous operations and eventually charge for rides represent a significant step in its recovery and future growth strategy. However, the success of these plans will depend on Cruise's ability to address safety concerns, satisfy regulatory requirements, and rebuild trust with both authorities and potential customers. The timeline for achieving these goals remains uncertain, highlighting the complex challenges facing companies in the autonomous vehicle industry.

Cruise, the self-driving technology division of General Motors is planning to resume its fully autonomous ride services later in the current year, with intentions to begin charging fares for these services by the beginning of 2025, according to a report by Bloomberg News.

Cruise, the self-driving technology division of General Motors is planning to resume its fully autonomous ride services later in the current year, with intentions to begin charging fares for these services by the beginning of 2025, according to a report by Bloomberg News. This information comes from sources familiar with the company's plans. The San Francisco-based Cruise has been working diligently to recover from a significant setback that occurred last year. The incident involved one of their autonomous vehicles, which collided with a pedestrian and subsequently dragged her for a distance of 20 feet (approximately 6 meters). In April, Cruise recommenced operations in the United States, but with a limited fleet of vehicles operated by human drivers in Phoenix, Arizona. However, the company's authorisation to provide passenger services using autonomous vehicles in the state of California remains suspended following the accident. Industry analysts and experts in the field have noted that the development of autonomous driving systems and robo-taxis is likely to be a challenging, costly, and time-consuming process. This is due to the numerous engineering challenges and regulatory hurdles that need to be overcome before such technology can be widely implemented. A spokesperson for Cruise provided a statement regarding the company's current focus: "Our continued focus is on rebuilding trust with regulators and improving AV (autonomous vehicle) performance with supervised autonomous testing underway in Phoenix, Dallas and Houston." The spokesperson emphasized the company's commitment to safety, stating, "Safety remains our guiding principle for expanding into driverless, we do not have a timeline to share right now." Earlier this week, Cruise announced a shift in its development strategy. The company revealed that it would be concentrating its efforts on developing a next-generation Chevrolet Bolt vehicle, rather than proceeding with the previously planned Origin vehicle. The Origin was intended to be a fully autonomous vehicle without a steering wheel or pedals for human control. In the aftermath of last year's accident, Cruise has found itself subject to multiple investigations. These include inquiries from the National Highway Traffic Safety Administration, the U.S. Department of Justice, and the Securities and Exchange Commission. These investigations are likely to scrutinize the company's safety protocols, operational procedures, and compliance with relevant regulations. The company's plans to resume autonomous operations and eventually charge for rides represent a significant step in its recovery and future growth strategy. However, the success of these plans will depend on Cruise's ability to address safety concerns, satisfy regulatory requirements, and rebuild trust with both authorities and potential customers. The timeline for achieving these goals remains uncertain, highlighting the complex challenges facing companies in the autonomous vehicle industry.

GM's Cruise to start charging for robotaxi rides from 2025, says reports

An auto industry outlook on investments in the Asia Pacific by BMI (a unit of Fitch Solutions) revealed that India attracted the maximum number of auto-related investments during Q1 2024. The BMI report tracked 38 new automotive manufacturing projects announced or inaugurated in Asia (valued at over $44.4 billion&nbsp;in total).&nbsp;India emerged as the most favoured investment destination, with nine of these investments.&nbsp;Following India were South Korea and Thailand, with six investments each.

However, the number of investments and the value of the investments tracked in Q1 2024 are down&nbsp;on a year-on-year basis. The number of projects dropped by 17.4%&nbsp;and&nbsp;the value drop&nbsp;was recorded&nbsp;at 36.6%.

Key reasons&nbsp;why&nbsp;investments in India&nbsp;were recorded&nbsp;going up include the Red Sea crisis and the market focus on developing the semiconductor industry – the latter witnessed significant&nbsp;investments,&nbsp;alongside the Indian EV value chain’s development. According to the BMI report, the Indian government has approved investments to&nbsp;the tune of&nbsp;$15.2 billion for developing three new semiconductor manufacturing plants. Given the Red Sea crisis, companies have also accelerated de-risking their supply chains, especially for India, by diversifying their logistic routes.

Also Read: <a href="https://www.wionews.com/business-economy/bosch-ventures-boosts-battery-recycling-with-strategic-investments-in-cylib-and-li-industries-723306">Bosch Ventures boosts battery recycling with strategic investments in Cylib and Li Industries</a>

The next boost for the Indian automotive sector could be&nbsp;the reduction in the&nbsp;taxation on hybrid cars. However, Nomura Ratings suggests the Finance Ministry is unlikely to take the matter up in the next GST council. As the proposal for this had been submitted to the Finance Ministry by Nitin Gadkari, Union minister for Road Transport and Highways, there were hopes that&nbsp;it would be taken up&nbsp;in the next GST council meeting.

As for South Korea, the country performed well due to access to the US EV market, subsidies through the US Inflation Reduction Act (IRA), and increased collaboration by the local industry with Japan, Europe and US-based automotive players. In Thailand, geopolitical stability and lucrative government incentives, including tax holidays spanning three to 11 years for EV production, will help promote EV production in the country.

An auto industry outlook on investments in the Asia Pacific by BMI (a unit of Fitch Solutions) revealed that India attracted the maximum number of auto-related investments during Q1 2024.

An auto industry outlook on investments in the Asia Pacific by BMI (a unit of Fitch Solutions) revealed that India attracted the maximum number of auto-related investments during Q1 2024. The BMI report tracked 38 new automotive manufacturing projects announced or inaugurated in Asia (valued at over $44.4 billion in total). India emerged as the most favoured investment destination, with nine of these investments. Following India were South Korea and Thailand, with six investments each. However, the number of investments and the value of the investments tracked in Q1 2024 are down on a year-on-year basis. The number of projects dropped by 17.4% and the value drop was recorded at 36.6%. Key reasons why investments in India were recorded going up include the Red Sea crisis and the market focus on developing the semiconductor industry – the latter witnessed significant investments, alongside the Indian EV value chain’s development. According to the BMI report, the Indian government has approved investments to the tune of $15.2 billion for developing three new semiconductor manufacturing plants. Given the Red Sea crisis, companies have also accelerated de-risking their supply chains, especially for India, by diversifying their logistic routes. Also Read: Bosch Ventures boosts battery recycling with strategic investments in Cylib and Li Industries The next boost for the Indian automotive sector could be the reduction in the taxation on hybrid cars. However, Nomura Ratings suggests the Finance Ministry is unlikely to take the matter up in the next GST council. As the proposal for this had been submitted to the Finance Ministry by Nitin Gadkari, Union minister for Road Transport and Highways, there were hopes that it would be taken up in the next GST council meeting. As for South Korea, the country performed well due to access to the US EV market, subsidies through the US Inflation Reduction Act (IRA), and increased collaboration by the local industry with Japan, Europe and US-based automotive players. In Thailand, geopolitical stability and lucrative government incentives, including tax holidays spanning three to 11 years for EV production, will help promote EV production in the country.

India leads in Asia in auto investments in Q1 2024: BMI

India’s auto sector will take 3-4 years to recover from this current situation. Cars and Suv's sales slumped in june due to the poor demand in market. Two wheeler sales goes down by 39 percent due to Coronavirus pandemic

Cars, Suv's sales slumped in june due to poor demands in market

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Indian small towns go big on auto financing

Auto sector contributes nearly 15 per cent to total GST, says SIAM president

GM's Cruise to start charging for robotaxi rides from 2025, says reports

India leads in Asia in auto investments in Q1 2024: BMI

Cars, Suv's sales slumped in june due to poor demands in market