The global automotive industry has never experienced an environment more unpredictable than now. The market forces shaping the industry are changing globally as well as in India.

The three imperatives today shape the future of India’s mobility industry: Changing consumer preferences here and abroad, electric vehicles, and intelligent mobility. In response, car manufacturers and the larger auto ecosystem will need to display an unprecedented degree of agility, move forward with a future-ready approach, and make constant innovation their status quo.

Evolving consumer preferences

Consumer preferences and expectations from the auto industry are fast changing globally as well as in India. The Indian market was once defined for its preference for budget frugality. Today it is evolving to more mature considerations.

Buyers today want more than just incremental feature improvements and fuel-efficiency. The brand experience, and the total cost of ownership, defined by the after-sales experience and product longevity influence vehicle buying to a larger extent.

With rising incomes and urbanisation, potential buyers are browsing for their car of choice across multi-segment offerings. Formally acknowledged as the Mecca of small cars only five years ago, India is witnessing robust year-on-year growth in demand for diverse segments, including SUVs and luxury cars.

The nation’s population clusters, a young, aspirational, internet-connected demographic, and rising real incomes are the key factors for the market’s transformation. Economic growth is also expanding the locus of demand; as shoots of economic prosperity rise even in the remotest of regions, bringing a new class of buyers from Tier 3 and Tier 4 markets.

Electric cars

An increasingly eco-conscious consumer base is also expressing more interest in how environmentally responsible their mobility is. Consumers across the globe are even willing to pay more for environmentally-conscious products, and this awareness is influencing market impact in India.

According to a Velocity MR research report, 90 per cent of India’s car owners would willingly switch to electric cars, with the caveat of infrastructural support. Aligned to the government’s vision for 30 per cent electric mobility by 2030 and increasing investment in electromobility infrastructure, a policy push will necessitate capacity creation for mass electric vehicle production.

EVs require less floor space and investment, and many of the work processes that underpin conventional vehicle manufacturing are completely irrelevant for EVs. An inevitable stage where hybrid, electric, and conventional cars are manufactured simultaneously will need a new approach to manufacturing to prevent efficiency loss.

Factories of the future

Whether influenced by regulations or consumer needs, the auto industry’s sustainability will be defined by how agile and flexible its supply chains are in rolling out end-products for diverse markets. Capable of shrinking processes and optimising production by leveraging IoT-sensor data, the logical progression of manufacturing is adopting the ‘factories of the future’ approach.

Spearheaded by the EU, the approach is a call-to-action for advanced manufacturing research and aggressive innovation, with participation that spans across MSMEs, enterprises, universities, research organisations and multi-sector organisations.

A new smart factory value chain will be vital to transform R&D innovation into ready-for-market products, and swiftly respond to market changes.

The digital reinvention of manufacturing will radically improve capacity utilisation, supply chain visibility and overall operational efficiency. Freeing workers to focus on function higher up in the value chain, automation will bring in cost-effectiveness and agility in processes.

The Indian auto industry has been one of the first adopters of robotics, artificial intelligence and inter-machine connectivity. Demonstrating efficiency, adaptability, agility and optimisation at the value chains of leading auto players, the ‘factories of the future’ approach is swiftly making India’s manufacturing standard globally competitive in terms of output and quality.

Over time, it will seamlessly incorporate the entire gamut of industry 4.0: The industrial internet, 3D printing, advanced analytics, and blockchain; the speed of their adoption will be the single biggest variable in realising scale, thereby defining auto sector profitability.

Connected cars

Functioning via a grid of sensors, today’s electric cars are in a rudimentary way, connected cars. The ‘connected car’, in its fullest potential, represents a unified, fully-integrated digital in-car experience. For both passengers and service providers, apps and digital dashboards are the real-time conduit of essential insights that enhance the in-car experience, safety, and the quality of service.

Features like usage-based information, remote access, remote diagnostics and preventive maintenance alerts will also create entirely new revenue streams for OEMs. By 2022, 75 per cent of connected car package deployments will be on smaller, less expensive cars, making the technology India-relevant.

The nation’s rapidly-improving manufacturing, regulatory, and logistics infrastructure, and its geographical proximity to the growing southeast Asian and African emerging markets are considerable advantages. Supported by the industry’s investment in cutting-edge technology and adoption of manufacturing 4.0, it can leverage its inherent advantages and strong market momentum to become the world’s foremost car-maker.

The auto industry must acknowledge this environment of incumbent disruption and align its strategy towards innovation and creating consumer-centric mobility solutions. The combination of technology integration, intelligent mobility and IoT will determine success in the new mobility marketplace.

The writer is Chief Executive Officer and Managing Director, Renault Nissan Automotive India