OPINION I Economic Times

India's auto sector plays a crucial role in economic growth, contributing around 7% to GDP and employing millions. PRICE's February ICE 360° Survey highlights that 67% of commuters in tier-2 cities rely on private vehicles, compared to 51% in major tier-1 cities like Delhi, Mumbai, Chennai andKolkata. This preference for personal mobility is driven by urban expansion,rising aspirations and limitations in public transport infrastructure.

Despite this trend, reliance on private vehicles over public transport in tier-2 cities signals a pressing need for improved transit infra. While 44% ofresidents in tier-1 cities were found to use public transport (metro, bus ortrain), only 22% in tier-2 cities do so. This gap presents opportunities and challenges for automakers and policymakers.

As tier-2 cities expand, demand for affordable, fuel-efficient vehicles isexpected to rise, pushing automakers to introduce innovative financingmodels, alternative-fuel vehicles and enhanced after-sales services to cater tothese evolving needs.
With longer commuting distances, particularly in tier-1 cities where 35% ofresidents travel 11-20 km daily, the transition to EVs can yield long-term costsavings and sustainability gains. But challenges such as inadequate chargingstations and high upfront costs remain barriers to mass adoption.Governments must implement policies that encourage faster EV adoptionthrough subsidies, incentives for battery tech advancements and developmentof extensive charging networks. PPPs can also accelerate this transition by investing in shared charging infra.

As the auto industry expands, the tyre sector is poised for growth. Increasedroad usage translates into higher demand for OEM and replacement tyres. Thesurvey indicates that 16% of tier-1 commuters and 7% of tier-2 commuterstravel over 21 km daily, leading to greater wear and tear. In metro areas,demand is high for high-performance, fuel-efficient and durable tyres, whiletier-2 cities prioritise affordability and all-weather reliability.

With EVs, tyre manufacturers must adapt by focusing on low-rolling-resistance tyres that enhance efficiency and reduce energy consumption. Also,investments in biodegradable materials, tyre retreading solutions and circulareconomy initiatives must be rolled out.
The survey also highlights a shift towards alternative commuting solutions.Leasing, ride-sharing and subscription-based mobility services are gainingpopularity, particularly in tier-1 cities, where flexibility and convenience driveconsumer behaviour. Automakers must embrace digitalisation and smart mobility solutions by integrating AI-driven navigation systems, IoT-enabled vehicle tracking and seamless payment models.

Meanwhile, policymakers should regulate and incentivise shared mobility tocomplement existing public transport options. Encouraging multimodal transport networks - where buses, metro, ride-hailing and last-mile solutionswork cohesively - can significantly reduce congestion and emissions in urbancentres.

To ensure a balanced mobility ecosystem, policymakers must adopt a multi-pronged approach:

a) Strengthen public transport in tier-2 cities, where only 22% of residents currently use it.

b) Expand metro networks, enhance bus rapid transit (BRT) corridors, and introduce last-mile connectivity initiatives such as e-bikes and feeder buses toreduce reliance on personal vehicles.

c) Invest in sustainable transport solutions, including hydrogen fuel cell vehicles and biofuels. The regulatory framework must also evolve to include stricteremission norms, mandatory safety standards for two-wheelers and incentivesfor vehicle scrappage to encourage fleet modernisation.

d) Encourage WFH to reduce congestion and fuel consumption. 8% of residentsin both tier-1 and tier-2 cities were found not to commute daily, largely due toremote work opportunities.

e) Governments and businesses should further incentivise flexible work models by integrating digital infrastructure,providing tax benefits for remote workers and promoting co-working spaces insuburban and rural regions.

As India transitions towards a smarter, more sustainable future, collaboration between industry stakeholders and GoI will be essential in addressing urbanmobility challenges. By fostering innovation, improving infra and incentivising green mobility solutions, India can position itself as a global leader in the next generation of transport systems. A strategic, forward-thinking approach will enhance the commuting experience for millions anddrive economic growth, environmental sustainability, and long-term resilience in the automotive and mobility sectors.