Once overshadowed by global brands, Indian carmakers now lead the charge in SUVs, EVs, and safety.
15 Jan 2026 | 196 Views | By Prerna Lidhoo & Ketan Thakkar
For the past two decades, India’s carmakers operated in the shadow of global benchmarks. German brands set the bar for engineering excellence, Japanese manufacturers defined reliability while Korean players raised the game on features and value. By contrast, Indian OEMs were focused on frugality and cost-efficient engineering but 2025 proved ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
For the past two decades, India’s carmakers operated in the shadow of global benchmarks. German brands set the bar for engineering excellence, Japanese manufacturers defined reliability while Korean players raised the game on features and value. By contrast, Indian OEMs were focused on frugality and cost-efficient engineering but 2025 proved to be the year when they truly came of age.
For the first time in years, there was a structural shift in India’s passenger vehicle pecking order, with Tata Motors and Mahindra & Mahindra both overtaking Hyundai to break into the top three by domestic retail sales. Mahindra emerged as the biggest gainer, expanding volumes to 5.93 lakh units in 2025 from 4.93 lakh units in 2024, aided by sustained demand for its SUV-heavy portfolio.
Tata Motors, too, edged ahead of Hyundai, growing retail sales to 5.68 lakh units in 2025 from 5.38 lakh units a year earlier. In contrast, Hyundai’s volumes remained largely flat year-on-year at around 5.6 lakh units, causing it to slip to fourth position despite its traditionally strong market presence. Maruti Suzuki, meanwhile, continues to dominate the market, raising its total domestic sales to 1.79 million units in 2025.
Much of this can be attributed to the Indian market’s shift towards SUVs and higher-value vehicles since the pandemic, as global incumbents were slower to reset their product mix. The pandemic disrupted not just supply chains and showroom footfalls, but the way Indian consumers thought about mobility itself.
For many buyers, a car shifted from being a discretionary upgrade to a symbol of personal security and self-reward after an extended period of uncertainty. The industry opened up to a very different emotional and economic landscape. Consumers were more digitally aware, more exposed to global benchmarks. This change unfolded with unusual speed, compressing years of gradual evolution into a short, intense post-COVID phase, according to experts.
"The question is, what has happened post-COVID which resulted in that? Of course, there is a lot of effort which has gone from Tata Motors and Mahindra's side as well in terms of product launches, but that is not enough. Post- COVID in general, there was a shift in consumer behavior, buying preferences and this trend has a lot to do with that mindset shift,” Kumar Rakesh, Associate Director, Equity Research, BNP Paribas Securities India, said.
He added that customers have become far more tech-savvy than before COVID. “Their expectations and aspirations have materially changed. Their propensity to spend has increased and the aspiration has also increased. That's something which happened in India in a very short period of time,” he said.
According to Rakesh, domestic companies were pretty quick to realize the shift from cost-conscious to valueconscious customers and adapt to it. “They are willing to pay extra if there is value in the car. Some features may not necessarily be practical for day to day use, but those are definitely something which customers started putting value to,” he explains.
According to automotive branding expert Avik Chattopadhyay, Indian OEMs had an advantage of focussing on value. “The Indian consumer looks for unmatched value. Not cheap. Neither expensive. Value,” he says. According to him, it is a strategic insight global automakers have often misunderstood. Safety, design, comfort, service, resale value, ownership costs, technology and features all are part of what Chattopadhyay describes as the “Indian thali”, where no single ingredient can be compromised.
Tata and Mahindra, along with other domestic players, have built strategies around this holistic definition of value, rather than focusing narrowly on cost or features alone. “The Indian consumer is value conscious but not budget constrained. Truly Indian brands like Mahindra, Tata, Bajaj, TVS, Ashok Leyland, Hero each understand this aspect of value very well and have crafted their strategies accordingly. They don’t have the same route, but have their own distinct approaches to delivering unmatched value. Maruti Suzuki also understands it. As does Hyundai. Both have a huge stake in this market. However, being 'managed' from elsewhere does have its issues in gestation periods,” he adds.
The SUV Factor
If there is a single product category that explains the reordering of India’s car market, it is the SUV. Over the past five years, SUVs have moved from being a high-margin niche to the structural centre of the passenger vehicle market, and now make up 60% of the entire market. Compact SUVs replaced premium hatchbacks as upgrade choices, while mid-size and large SUVs became the default aspiration for urban and semi-urban buyers.
This shift was driven by a mix of practical and emotional factors like higher seating, road presence, perceived safety and the promise of versatility. Mahindra and Tata Motors were able to tap into this trend early with a clear view of the market that aligned well with evolving consumer expectations. Their SUV portfolios spanned multiple sub-segments, price points and use cases, allowing them to capture demand as it cascaded down the market.
“Trends have shown that Indian consumers have been shifting away from entry-level hatchbacks from over a decade ago, with persistent waiting periods on SUVs from both Indian and global OEMs clearly signaling where the real market pull lay. Some global OEMs prolonged their reliance on small-car assets to maximize returns rather than swiftly rebalancing toward compact and mid-size SUVs, creating space for more agile competitors to gain ground,” Vivek Srivatsa, Chief Commercial Officer, Tata Passenger Electric Mobility said.
This, he added, opened a strategic window for some manufacturers to invest ahead of the curve in higher-value, feature-rich SUVs, allowing them to elevate their position up the value chain by directly meeting evolving customer demands. SIAM data shows Mahindra’s UV volumes more than doubling from 2.24 lakh units in FY22 to 5.51 lakh units in FY25, while Tata Motors saw an even sharper turnaround, from sub-1 lakh units pre-COVID to 4.33 lakh units in FY25.
Products such as Tata's Nexon, Punch and Mahindra's Scorpio, Thar and XUV range have aligned perfectly with the market’s SUV-first shift. By contrast, Maruti Suzuki and Hyundai have grown in absolute terms but at a slower pace, indicating they participated in the SUV boom rather than shaping it.
As Rakesh puts it, whoever was ready with a good SUV portfolio was able to capture and benefit from that. “Sustained investments in design, EV capabilities, lifestyle appeal and technology have enabled us to introduce vehicles that connect strongly with buyers. The work of the last decade has created a solid foundation," said Rajesh Jejurikar, Executive Director and CEO (Auto and Farm sector) of Mahindra & Mahindra.
According to Srivatsa, in recent years, Indian consumers have increasingly gravitated toward SUVs, stronger safety credentials, and more expressive designs. “At Tata Motors PV, we anticipated these shifts early and acted decisively. As a leading player in the Indian automotive industry, we pioneered the safety movement with the Nexon becoming India’s first Global NCAP 5-star rated car in 2018. At the same time, we rapidly expanded our SUV portfolio with six launches in just seven years, positioning us perfectly in a market where crash ratings, structural strength and perceived protection now outweigh incremental mileage or marginal resale value,” he said.
Consumer research reveals that design has emerged among the top three purchase drivers. This insight, he adds, led Tata Motors to elevate design and brand identity across its portfolio, to ensure that its SUVs are chosen not only for their performance and running costs but also for their striking aesthetics. According to V G Ramakrishnan, MD of Avanteum Advisors, the real transformation since 2005 is how Tata and Mahindra have reshaped themselves.
“Mahindra and Tata have always been among the top 5 PV manufacturers over the last 20 years in India. The key change between 2005 and now in 2026 is how these companies have adapted to changing customer preferences and taken advantage of the opportunities. The distinct feature of these companies' strong position stems directly from their strong design philosophies, platform approach, and electrification.
Tata, in particular, benefited from its relentless focus on portfolio electrification and new product launches,” he said. Mahindra’s focus on its core has paid rich dividends as the markets turned SUV centric with electrification being an additional theme of growth and customer acquisition, he adds.
“The quantum improvements in design, engineering, refinement and safety has meant that the customer base is made up of aspirational buyers and achievers, a significant change compared to ten years ago,” he said. According to experts, changes in regulatory and emission norms like BS IV to BS VI, raw material price inflation and an increase in insurance costs led to a shrinking of the entry level hatchback segment which was a major chunk of sales for both Maruti Suzuki and Hyundai pre-COVID.
The hatchback segment is now 22% of the market, down from around 50% pre-COVID. “These incremental regulatory norms, which increased the prices more for the entry segment, could have accelerated the divergence between the bigger vehicles and entry segments. Unfortunately, some of the Korean and Japanese companies were more exposed to those entry segments,” Rakesh said.
Srivatsa said that at Tata Motors, tighter emission and safety regulations were “embraced as a challenge”. “We invested heavily in safety well ahead of Bharat NCAP timelines and pioneered robust crash structures and active/passive safety features even before regulations required them. Tighter emission and safety norms initially presented more of a disadvantage than a leveler for manufacturers like us. While global players could localise proven technologies like SCR with AdBlue, we had to fundamentally reinvent our product strategy and bring in innovation to maintain competitiveness in the market,” he said.
On emissions, the company delivered an industry-first solution by combining advanced EGR technology with a Lean NOx Trap across select diesel engines well ahead of the BS6 implementation timelines. As a result, popular diesel models such as the Altroz, Nexon, Curvv and now the Sierra operate without the need for AdBlue, active DPF regeneration or diesel exhaust fluid.
This engineering-led approach reduces NOx emissions while preserving strong torque, even in demanding vehicles like the Sierra, without introducing the added complexity, maintenance burden or refill-related range anxiety associated with conventional diesel aftertreatment systems. In doing so, regulatory compliance was turned into a clear point of differentiation versus global competitors that continue to rely on imported solutions. Today, all of Tata’s SUVs and the Altroz have achieved 5-star rating under the testing programme.
The EV Boost
Electric vehicles have further amplified the advantage enjoyed by India’s homegrown automakers. Tata Motors’ early bet on battery-electric vehicles gave it a first-mover edge and also effectively seeded India’s mass electric passenger vehicle market. Mahindra & Mahindra, meanwhile, is now scaling up aggressively with a range of born-electric SUVs positioned as aspirational products.
India’s electric passenger vehicle (e-PV) market delivered its strongest performance yet in 2025, with retail sales surging 77% year-on-year to 176,980 units, up from 99,838 units in 2024. Despite higher upfront prices compared to petrol and diesel vehicles, buyers are increasingly opting for EVs, attracted by lower running costs, expanding model choice and growing confidence in the technology. Between 2015 and 2024, cumulative electric PV sales crossed 425,000 units.
For Tata Motors, the last year saw its highest-ever annual electric PV retail sales at 69,955 units, up 13% year-on-year. However, its market share fell sharply to 40% from 62% in 2024. Mahindra, in particular, emerged as the standout challenger, finishing 2025 with customer deliveries of 33,512 electric SUVs, a 369% increase over 2024’s 7,153 units.
The surge nearly tripled Mahindra’s market share to 19% from 7%. The growth was driven by the BE 6 and XEV 9e, followed by the debut of the XEV 9S in November, Mahindra’s first three-row electric SUV built on the modular INGLO skateboard platform. While protectionist policies and localisation mandates have undoubtedly shaped India’s EV landscape, analysts argue it has worked in favour of the industry.
“India historically has had some protectionist policies and it has worked well for the industry. It has been able to significantly expand the entire value chain within India. If the policy is not focused on domestic localization, it may prolong the EV adoption and could be counterproductive,” Rakesh says. “They were far more agile and prepared to capture the trend in India. This is something which we saw in China as well, where the domestic brands were more agile,” he adds.
Safety Advantage
For much of India’s automotive history, safety was treated as a negotiable variable and was often diluted in execution in a price-sensitive market. Traditionally, global players like Maruti Suzuki and Hyundai Motor India possessed the engineering capability to build structurally robust vehicles, yet frequently chose not to deploy it fully for India.
Lighter platforms and pared-back specifications helped protect costs, margins and volumes, reinforcing the long-held assumption that safety was not a decisive purchase trigger. Tata Motors and Mahindra & Mahindra challenged that assumption head-on. By voluntarily submitting vehicles to Global NCAP well before regulatory pressure made it unavoidable and by actively communicating five-star crash ratings, they reframed safety from a cost burden into a brand differentiator.
Models such as the Nexon, Punch and XUV300 changed the frame of reference through which Indian buyers evaluated vehicles. “Safety was no longer an abstract promise, it became a measurable, comparable attribute; and Indian players capitalised well on that.
Safety was an early priority for them and they set the standard for it in their own right,” Ramakrishnan said. While many have now strengthened their structures, improved safety equipment and started talking about safety as a hygiene factor, experts point out that it was the homegrown brands that actually set the standard. Faster cycles and louder design became other advantages through which Indian manufacturers stood out.
Indian automakers stopped looking westward for cues. Europe and Japan build excellent cars, but with slower development cycles and cautious design changes. Tata and Mahindra, however, adopted a rhythm closer to what China’s EV champions have normalised: compressed timelines, parallel software-hardware integration, and bold, expressive design. “The results are visible. We should just credit their aggressive product strategies, design overhaul and the right bets that worked for the Indian players.
Connectivity, screens, driver-assistance systems and software-led features are baseline expectations for consumers now,” Ramakrishnan said. Mahindra’s Born Electric concepts and Tata’s Curvv and Avinya studies, for example, are not globally sanitised compromises. They are deliberately futuristic and digital, and designed for consumers who expect their cars to resemble consumer electronics as much as transport appliances.
At Mahindra, the change has been explicit. Its engineering ecosystem, anchored by the Mahindra Research Valley, now houses more than 5,000 engineers and is tightly linked with development nodes in Kandivali, Mumbai, and overseas centres. All core platform, architecture and software development work is conducted in-house. It allows Mahindra to integrate safety systems, electronics and software early in the development cycle, shorten timelines and manage costs without diluting ambition. Tata Motors has chosen a different route.
Rather than replicate every capability internally, it draws on the wider Tata Group’s strengths in software, digital services, electronics and advanced manufacturing. This federated model allows Tata Motors to move quickly without duplicating expertise, particularly in connectivity, electrification and safety.
“It's not like the global companies have not responded to this change in market preferences. Many of these global companies have started coming with features the domestic companies were offering, be it on the safety front or tech-driven connectivity features. But there was a lag. It took them some time to realize the shift, build the product around that and then finally launch in the market,” Rakesh said.
Srivatsa argues that Tata’s focus on the real mobility needs of the consumer and the features they genuinely use has led to the steady rise on the sales charts. “We have realized that the average customer appreciates a locally made product, but isn’t necessarily making a purchase because a product is manufactured locally; they are instead focusing on the right product which adds value to them and serves their requirement. Of course, we wear the ‘Vocal for Local’ badge proudly, but it isn’t something that drives our sales volumes,” Srivatsa said.