The case for a fully synchronized supply chain in India's automotive industry

The case for a fully synchronized supply chain in India’s automotive industry

After multiple quarters of muted performance, India’s automotive industry bounced back with a record-breaking October. Festive demand, GST cuts, and improved consumer sentiment brought more footfalls to dealerships. The positive trend flowed into the results as well, with Bajaj, Mahindra, and TVS reporting strong profits.

The momentum was not limited to OEMs. India’s auto components industry achieved a strong growth in the past fiscal year, with turnover crossing $80.2 billion, supported by domestic manufacturing initiatives such as ‘Atmanirbhar Bharat’ and Production Linked Incentive (PLI) schemes. Meanwhile, the aftermarket is also shifting gears as EV adoption accelerates—the EV aftermarket alone is projected to reach $14.3 million by 2033.

While companies are taking steps towards Industry 4.0 adoption and local manufacturing capacity has strengthened the outlook, several structural challenges still hinder the automotive ecosystem’s ability to scale efficiently.

What challenges are holding the auto industry back?

Supply chain disruptions

Raw material shortages, geopolitical volatility, and tariff pressures continue to strain operations. TVS Motors recently highlighted the scarcity of rare earth materials, which pushed EV inventory levels below 25 days despite strong demand. For component makers, the newly introduced 8% tariff by the U.S. has intensified pressure on export-dependent suppliers.

Mixed demand signals

Automakers face a complex balancing act between BEVs, HEVs, and ICE vehicles. Despite growing interest in EVs, 54% of Indian buyers still prefer ICE, according to Deloitte. This split has made demand forecasting increasingly difficult, leading to production delays, misaligned inventory, and higher planning costs.

Fragmented systems and poor visibility

Most OEMs and suppliers still rely on disconnected ERPs, WMSs, and TMSs. The lack of a unified view across sourcing, production, warehousing, and transportation leads to inefficiencies and slower response times. A NITI Aayog report categorizes these gaps as major barriers to supply chain effectiveness. 

 

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