Introduction 

The automobile and automobile spares manufacturing industries are among the most important and dynamic sectors of the economy, contributing significantly to the GDP, employment, exports, and innovation. The industries produce a wide range of products, such as passenger cars, commercial vehicles, two-wheelers, three-wheelers, tractors, engines, transmissions, chassis, body parts, electrical and electronic components, tires, batteries, and accessories. The industries are also closely linked to other sectors, such as steel, rubber, plastics, chemicals, and electronics, creating a multiplier effect on the overall economic activity. 

The automobile and automobile spares manufacturing industries are also facing various challenges and opportunities in the changing market scenario, such as the emergence of new technologies, the shift in customer preferences, the rise of new competitors, the impact of environmental regulations, and the effects of the COVID-19 pandemic. The industries need to adopt innovative and adaptive strategies to overcome the hurdles and leverage the potentials of the sector. 

Market Potential 

Global Market 

The global market for automobiles and automobile spares is expected to grow at a compound annual growth rate (CAGR) of 5.7% from 2020 to 2027, reaching a value of USD 9.6 trillion by 2027, according to a report by Grand View Research. The key drivers of the market growth are the rising demand for personal mobility, the increasing disposable income, the rapid urbanization, the technological advancements, and the environmental regulations. The major regions that dominate the market are Asia-Pacific, Europe, and North America, with China, India, Japan, Germany, France, the UK, the US, and Canada being the leading markets. The major segments that account for the largest share of the market are passenger cars, light commercial vehicles, heavy commercial vehicles, and two-wheelers. 

The global market for automobiles and automobile spares is also witnessing various trends and developments, such as the adoption of electric vehicles, the integration of smart and connected features, the emergence of autonomous and shared mobility, the diversification of product portfolio, and the consolidation of market players. The industries need to keep pace with the changing customer expectations, the evolving technological landscape, the increasing competitive pressure, and the dynamic regulatory environment. 

Indian Market 

The Indian market for automobiles and automobile spares is one of the largest and fastest-growing markets in the world, ranking fourth in terms of production and third in terms of consumption. The market size of the sector was estimated at USD 118.4 billion in 2019, and is projected to reach USD 300 billion by 2026, growing at a CAGR of 15%, according to a report by India Brand Equity Foundation. The key drivers of the market growth are the low penetration of vehicles, the favorable demographics, the supportive policies, the infrastructure development, and the increasing consumer preferences. The major segments that contribute to the market are two-wheelers, passenger vehicles, commercial vehicles, and three-wheelers, with two-wheelers being the most dominant segment. 

The Indian market for automobiles and automobile spares is also experiencing various challenges and opportunities, such as the impact of the COVID-19 pandemic, the transition to BS-VI emission norms, the implementation of the scrappage policy, the promotion of electric vehicles, the development of rural and urban markets, and the enhancement of manufacturing and export capabilities. The industries need to address the issues of demand revival, supply chain disruption, cost optimization, quality improvement, and innovation acceleration. 

Andhra Pradesh and Telangana Market 

The Andhra Pradesh and Telangana market for automobiles and automobile spares is one of the emerging and promising markets in India, owing to the strategic location, the availability of skilled manpower, the abundant natural resources, the conducive business environment, and the strong demand. The market size of the sector was estimated at USD 6.5 billion in 2019, and is expected to grow at a CAGR of 12% from 2020 to 2025, reaching a value of USD 11.6 billion by 2025, according to a report by KPMG. The key segments that drive the market are passenger vehicles, two-wheelers, commercial vehicles, and tractors, with passenger vehicles being the most lucrative segment. The major players that operate in the market are Kia Motors, Mahindra and Mahindra, Ashok Leyland, Tata Motors, Hero MotoCorp, TVS Motor, Bajaj Auto, and Escorts. 

The Andhra Pradesh and Telangana market for automobiles and automobile spares is also offering various advantages and incentives to the industries, such as the availability of land, power, water, and infrastructure, the provision of subsidies, tax benefits, and exemptions, the establishment of industrial corridors, parks, and clusters, the facilitation of single-window clearance and self-certification, and the promotion of skill development and entrepreneurship. The industries need to capitalize on the opportunities and benefits provided by the state governments and the local authorities, and also cater to the needs and preferences of the regional customers. 

Government Subsidies and Incentives 

Government of India 

The Government of India provides various subsidies and incentives to the automobile and automobile spares manufacturing industries, with the aim of promoting the development, competitiveness, and sustainability of the sector. Some of the major schemes and policies are: 

• The Automotive Mission Plan 2016-2026, which envisages an increase in the contribution of the sector to the GDP from 7.1% to 12%, an increase in the exports from USD 11 billion to USD 80 billion, and an increase in the employment from 32 million to 65 million by 2026. The plan also identifies the key areas of intervention, such as infrastructure, skill development, technology, innovation, quality, safety, environment, and regulation. 
• The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, which provides incentives for the production and adoption of electric and hybrid vehicles, such as demand incentives, supply incentives, charging infrastructure, and research and development. The scheme also aims to reduce the dependence on fossil fuels, lower the carbon emissions, and enhance the energy security. 
• The Production Linked Incentive (PLI) scheme, which provides incentives for the production of advanced automotive technology products, such as electric vehicles, hydrogen fuel cell vehicles, autonomous vehicles, connected vehicles, and advanced driver assistance systems. The scheme also aims to boost the manufacturing competitiveness, increase the value addition, and create global champions. 
• The Modified Special Incentive Package Scheme (MSIPS), which provides incentives for the production of electronic components and systems, such as capital subsidy, tax exemption, and duty waiver. The scheme also aims to attract investments, promote exports, and create employment. 
• The National Automotive Testing and R&D Infrastructure Project (NATRiP), which provides infrastructure and facilities for the testing and certification of vehicles and components, such as test tracks, crash labs, emission labs, and noise labs. The project also aims to improve the quality, safety, and performance of the products, and support the compliance with the national and international standards. 

Government of Andhra Pradesh 

The Government of Andhra Pradesh provides various subsidies and incentives to the automobile and automobile spares manufacturing industries, with the aim of attracting investments, creating employment, and enhancing the industrial growth of the state. Some of the major schemes and policies are: 

• The Andhra Pradesh Industrial Development Policy 2020-23, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, GST reimbursement, investment subsidy, and skill development subsidy. The policy also offers special incentives for women entrepreneurs, backward areas, mega projects, and anchor industries. 
• The Andhra Pradesh Electric Mobility Policy 2018-23, which offers incentives such as capital subsidy, road tax exemption, registration fee exemption, parking fee exemption, and charging infrastructure subsidy for the promotion of electric vehicles and related components. The policy also offers support for the development of battery manufacturing, recycling, and swapping facilities, and the creation of electric mobility zones and green corridors. 
• The Andhra Pradesh Aerospace and Defence Electronics Park Policy 2018-23, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, GST reimbursement, investment subsidy, and skill development subsidy for the development of aerospace and defence electronics clusters. The policy also offers support for the establishment of testing and certification facilities, incubation and innovation centers, and skill development centers. 
• The Andhra Pradesh Mega Industrial Hub Policy 2017-22, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, GST reimbursement, investment subsidy, and skill development subsidy for the establishment of mega industrial hubs with an investment of more than USD 500 million. The policy also offers support for the provision of infrastructure, utilities, and connectivity, and the facilitation of clearances and approvals. 
• The Andhra Pradesh Industrial Corridor Development Authority Act 2017, which provides for the development of industrial corridors along the coastal and inland regions of the state, such as the Visakhapatnam-Chennai Industrial Corridor, the Chennai-Bengaluru Industrial Corridor, and the Hyderabad-Bengaluru Industrial Corridor. The act also provides for the establishment of special purpose vehicles, industrial area local authorities, and industrial corridor nodes. 

Government of Telangana 

The Government of Telangana provides various subsidies and incentives to the automobile and automobile spares manufacturing industries, with the aim of fostering innovation, competitiveness, and inclusiveness of the sector. Some of the major schemes and policies are: 

• The Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS) Act 2014, which provides for a single-window clearance system, a time-bound approval process, a self-certification mechanism, and an automatic approval system for the industrial projects. The act also provides for a grievance redressal mechanism, a monitoring and evaluation system, and a penalty for delay in approvals. 
• The Telangana State Industrial Incentive Scheme 2014, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, VAT/CST/GST reimbursement, investment subsidy, and skill development subsidy. The scheme also offers special incentives for women entrepreneurs, backward areas, mega projects, and anchor industries. 
• The Telangana State Electric Vehicle and Energy Storage Policy 2020-30, which offers incentives such as capital subsidy, road tax exemption, registration fee exemption, parking fee exemption, and charging infrastructure subsidy for the promotion of electric vehicles and related components. The policy also offers support for the development of battery manufacturing, recycling, and swapping facilities, and the creation of electric mobility zones and green corridors. 
• The Telangana State Electronic Policy 2016-21, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, VAT/CST/GST reimbursement, investment subsidy, and skill development subsidy for the development of electronic manufacturing clusters. The policy also offers support for the establishment of testing and certification facilities, incubation and innovation centers, and skill development centers. 
• The Telangana State Aerospace and Defence Policy 2015-20, which offers incentives such as land allotment, stamp duty reimbursement, power cost reimbursement, interest subsidy, VAT/CST/GST reimbursement, investment subsidy, and skill development subsidy for the development of aerospace and defence parks. The policy also offers support for the establishment of testing and certification facilities, incubation and innovation centers, and skill development centers. 

Marketing and Sales 

The marketing and sales strategies for the automobile and automobile spares manufacturing industries depend on various factors, such as the target market, the customer segment, the product category, the competitive landscape, and the regulatory environment. Some of the common marketing and sales techniques are: 

• Segmentation, targeting, and positioning (STP), which involves identifying the potential customers, selecting the most attractive segments, and creating a unique value proposition for the products. For example, the industries can segment the customers based on their income, age, gender, location, lifestyle, and preferences, and target the segments that have high demand, growth, and profitability, and position the products as affordable, reliable, innovative, or eco-friendly. 
• Product differentiation and innovation, which involves developing and launching new and improved products that offer superior features, benefits, and value to the customers. For example, the industries can differentiate and innovate the products by introducing new models, designs, variants, colors, technologies, and functionalities, and enhancing the performance, quality, safety, and efficiency of the products. 
• Pricing and discounting, which involves setting and adjusting the prices and discounts of the products based on the demand, cost, competition, and customer perception. For example, the industries can price and discount the products by adopting various strategies, such as cost-plus, value-based, skimming, penetration, bundling, or dynamic pricing, and offering various discounts, such as seasonal, festive, volume, or loyalty discounts. 
• Distribution and channel management, which involves selecting and managing the intermediaries, such as dealers, distributors, retailers, and online platforms, that deliver the products to the customers. For example, the industries can distribute and manage the channels by choosing the appropriate level, intensity, and type of distribution, and ensuring the availability, accessibility, and visibility of the products, and maintaining the relationship, communication, and coordination with the channel partners. 
• Promotion and advertising, which involves communicating and persuading the customers about the products and the brand, using various media, such as print, television, radio, online, social media, and events. For example, the industries can promote and advertise the products by creating and delivering effective and consistent messages, slogans, logos, and images, and highlighting the features, benefits, and value of the products, and the identity, reputation, and values of the brand. 
• Customer relationship management (CRM), which involves building and maintaining long-term relationships with the customers, by providing after-sales service, feedback, loyalty programs, and referrals. For example, the industries can manage the customer relationship by offering timely and quality service, warranty, repair, and replacement, and collecting and analyzing the customer feedback, satisfaction, and complaints, and rewarding the loyal and repeat customers, and encouraging the referrals and word-of-mouth. 

Investment Required 

The investment required for the automobile and automobile spares manufacturing industries varies depending on the type, scale, and location of the project. The following table provides an indicative estimate of the investment required for different production scales, based on the average cost of land, building, machinery, and working capital in India, as per the MSME Development Institute. 

The investment required for the automobile and automobile spares manufacturing industries may also vary depending on the availability and cost of the raw materials, utilities, labor, and transportation, and the subsidies and incentives offered by the government and the local authorities. The industries need to conduct a detailed feasibility study and prepare a project report before initiating the investment process.