India to overtake China and Japan as the world's largest car market by 2030, says Moody's.

Mumbai May 31, 2025: In its forecast for passenger car sales in Southeast Asia, the international analytical firm Moody's Ratings projects that India's auto market will overtake China and Japan by the end of the decade, reaching nearly 5.1 million units from 4.2 million in 2024.

Moody's predicts that through 2030, India's automobile sales will increase at a compound annual growth rate (CAGR) of 3.5%, surpassing the growth rates of South Korea, Japan, and China. In comparison to the penetration rates in China (251), South Korea (422), Japan (502 vehicles), and Indonesia (76), India currently has just 44 passenger cars per 1,000 people.

“India is set to outperform other major Asian markets in car sales growth through 2030,” the report states, noting that the country has already expanded its automotive market by 60% since 2015, when it recorded sales of 2.6 million units. Moody's also indicated that India, which is currently the world’s third-largest car market after the U.S. and China, still has significant room for growth.

A potential shift of just 9–10% of two-wheeler owners upgrading to entry-level cars could generate demand for an additional 1.6–1.8 million vehicles by 2030.

Domestic automakers are also making strides toward electric vehicles (EVs). Indian companies like Tata Motors and Mahindra & Mahindra have announced a combined investment of $10 billion in EVs, lithium-ion cells, and battery production. Although EVs currently account for only about 2% of total car sales, the long-term potential is seen as considerable.

Market dynamics are changing as well. In 2015, Indian automakers represented just 11% of the market; that share has more than doubled to 24% in 2024, driven by companies like Tata and Mahindra. In contrast, Japanese manufacturers, who have historically dominated the Indian market, have seen their share decrease from 61% to 51% during the same period. The Hyundai Motor Group, including Kia, has gained market share, rising from 18% to 20%.

Despite their global dominance in the EV market, Chinese carmakers have struggled to make an impact in India, holding only about 1% of the market share.

“India’s structural advantages, including its demographics and low car ownership rates, make it a critical growth market for global and domestic carmakers,” the report concludes.