AUTOMOTIVE ASSEMBLY MARKET ANALYSIS

Automotive Assembly Market Size and Trends

Global automotive assembly market is estimated to be valued at USD 49.13 Bn in 2024 and is expected to reach USD 72.91 Bn by 2031, exhibiting a compound annual growth rate (CAGR) of 5.8% from 2024 to 2031.

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Major automakers are investing heavily in developing electric vehicle models and technologies to transition from internal combustion engine vehicles. Government support through subsidies and regulations also boosts the adoption of electric vehicles in regions like Europe to reduce emissions. Furthermore, rising environmental concerns and decreasing battery prices are making electric vehicles an attractive alternative for consumers. This rising demand for electric vehicles is expected to drive the automotive assembly market growth in the near future.

Growing Demand for Electric Vehicles

The automotive industry  has witnessed a gradual shift towards more environment-friendly vehicles. Stricter emission norms around the world are pushing automakers to invest heavily in developing electric vehicles. Consumer preferences are also changing as people are becoming more conscious about the environmental impact of their commute. Electric vehicles are now seen as a viable alternative to conventional internal combustion engine vehicles, especially for daily city driving. Most major automakers have announced ambitious electric vehicle expansion plans over the next decade to cater to growing demand. New EV models are being rolled out across various vehicle segments attracting more customers. Governments in several countries are offering purchase incentives and subsidies for electric vehicles to further encourage their adoption. Factors like lower operating costs and maintenance are making electric vehicles an attractive option for both individual buyers and fleet operators. With technology advancements, range anxiety issues are also getting addressed to some extent, bolstering customer confidence in EVs. If this growing transition towards electric occurs at a rapid pace in the near future, it can significantly impact automotive assembly operations as electric powertrains require different components and manufacturing processes compared to traditional vehicles. Automakers will need to ramp up investments in electric vehicle production lines and re-skilling their workforce to gain from this market shift.

For instance, according to the report published by International Energy Agency (IEA),global electric vehicle sales had increased by 10 million units in 2022.  There was a 35% increase in sales in 2023, pushing the total to 14 million units. This rapid growth has elevated electric cars' market share from 4% in 2020 to 14% in 2022, with expectations to climb to 18% in 2024.

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Rising Demand in Developing Markets

Rising demand for vehicle from developing economies can drive the market growth. Countries like India, Brazil, Mexico, Indonesia and others are witnessing strong economic growth and improving income levels, thus, creating a burgeoning middle-class population. As disposable incomes rise, more people in these emerging markets now have the purchasing power to buy personal vehicles instead of relying on public transport.  Inadequate public infrastructure in such developing nations is also driving individual vehicle ownership. Automakers are making focused investments in these high growth regions to capitalize on the market opportunity. These are establishing local manufacturing plants as well as sourcing auto components from within the country to cater to the indigenous demand. Stringent local sourcing regulations in large developing markets like India encourage automotive assembly within the country. Moreover, automakers are rolling out more affordable entry-level models designed specifically for price-sensitive customers in emerging markets. If economic and infrastructure development continues at the current pace, rising vehicle demand from developing regions will remain a major driver propelling future growth of the global automotive assembly industry. For instance, according to the report published by Olx Crisil Mobility, following a remarkable 27% growth in FY23 with 3.9 million units sold, passenger vehicle (PV) sales in India are anticipated to increase at a more moderate pace of 6-8% in FY24,.  Growth rate of 5-7% compound annual growth rate (CAGR) is expected in 2024. India's PV sales continue to progress steadily, outpacing many other markets that are still struggling to recover to pre-pandemic levels. Car dispatches exceeded 300,000 units every month throughout the entirety of 2023, a first in the calendar year.