Country's automotive sector embraces petrol, diesel, CNG and electric options to serve diverse consumer needs across varied economic and geographic landscape.
05 Jun 2025 | 53 Views | By Vivek Srivatsa, TPEM
India’s car market is vibrant, as diverse ambitions harmonise with diverse necessities. In FY25, the industry hit a milestone by dispatching an estimated 4.34 million vehicles domestically highlighting a 2% rise from the 4.22 million units sold in FY24.
India’s car market is booming, and it’s not just about ...
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India’s car market is vibrant, as diverse ambitions harmonise with diverse necessities. In FY25, the industry hit a milestone by dispatching an estimated 4.34 million vehicles domestically highlighting a 2% rise from the 4.22 million units sold in FY24.
India’s car market is booming, and it’s not just about more people buying vehicles but rather it’s about how the market juggles four different powertrains: petrol, diesel, CNG, and electric.
Unlike many global markets racing toward full electrification, India’s landscape demands a more nuanced approach. With varied terrains, economic disparities, and infrastructural gaps, it is practically impossible for a single fuel type to dominate the market. Instead, these powertrains coexist, each addressing specific consumer needs while aligning with the country’s broader goals.
The Role of Hatchbacks in a Multi-Powertrain Market
Hatchbacks are the cornerstone of India’s entry-level car segment, cherished for their compact size, affordability, and fuel efficiency. They resonate with first-time buyers, from urban commuters navigating crowded streets to rural families seeking reliable transport.
The genius of offering multiple powertrains such as petrol, diesel, CNG, and electric, within a single model lies in its inclusivity. This strategy allows automakers to cater to diverse demographics, ensuring that cost-conscious city dwellers and fuel-reliant rural drivers alike find a suitable option, broadening market appeal.
This flexibility strengthens automakers’ resilience in a shifting landscape. By providing varied powertrain options, manufacturers can adapt to evolving consumer preferences, fuel price fluctuations, and tightening regulations. Hatchbacks, with their multi-powertrain offerings, not only make car ownership accessible but also future-proof the industry against uncertainties.
This approach underscores the market’s commitment to inclusivity, ensuring that mobility remains within reach for millions across India’s economic and geographic spectrum, solidifying hatchbacks as a vital pillar of the automotive ecosystem.
Addressing Income Diversity and Price Sensitivity
India’s car buyers reflect a broad economic spectrum, from rural families to urban professionals, all prioritizing total cost of ownership like purchase price, fuel, and maintenance. CNG stands out for its low running costs, making it a top choice for budget-conscious urban commuters.
Factory-fitted CNG vehicles are surging in popularity, particularly among middle-class buyers who value affordability and eco-friendliness. Petrol, with its lower upfront costs and widespread availability, remains a staple, especially in areas where alternative fuels are scarce, offering flexibility for diverse driving needs.
Diesel, though declining due to stringent emission norms, still serves high-mileage drivers in semi-urban and commercial sectors, where durability and fuel efficiency matter.
Electric vehicles, supported by subsidies and promising long-term savings, appeal to tech-savvy urbanites but face challenges in rural areas due to limited charging infrastructure. This diverse powertrain mix ensures every buyer finds a vehicle that fits their budget and lifestyle, balancing immediate affordability with long-term value and addressing India’s unique economic and geographic realities.
Environmental Commitments Shaping the Future
India’s environmental goals are reshaping the automotive landscape. Commitments made at COP26 to cut carbon intensity and boost clean energy by 2030 have set the stage for cleaner powertrains. Stricter BS6 norms have pushed automakers to refine combustion technologies, while government initiatives like FAME II and state-level EV subsidies are accelerating electric mobility.
Charging infrastructure is growing, though rural areas lag behind urban centers. CNG serves as a pragmatic bridge that is cleaner than traditional fuels and more accessible than EVs in many regions. Supportive policies, like tax breaks in states such as Gujarat and Maharashtra, further fuel CNG adoption.
Diesel’s role is shrinking as its environmental impact draws scrutiny, but petrol, CNG, and hybrids remain vital transitional players in India’s sustainability journey.
A Balanced Path Forward
The coexistence of petrol, diesel, CNG, and electric powertrains is not a compromise but a strength. From economic diversity to varied geography, and evolving environmental priorities, it reflects India’s ability to adapt to its complex realities.
By offering a spectrum of powertrains, the industry ensures mobility remains inclusive, affordable, and sustainable. This approach not only meets today’s demands but also paves the way for a future where innovation and pragmatism go hand in hand, steering India toward a cleaner, and more accessible automotive landscape.
Vivek Srivatsa is the Chief Commercial Officer at Tata Passenger Electric Mobility. Views expressed are the author's personal.