The Road Ahead: India's Automotive and Zinc Industries in FY26
April 30, 2025, 10:08 am
India's automotive and zinc industries are at a crossroads. The passenger vehicle (PV) sector is set to cross 5 million units in FY26, but growth is slowing. Meanwhile, Hindustan Zinc Limited is soaring, reporting a 33% profit increase. These two sectors reflect the broader economic landscape, where challenges and opportunities coexist.
The passenger vehicle market is a tale of two stories. On one hand, utility vehicles (UVs) are driving growth. New launches and easing interest rates are like wind in their sails. The rural economy is also recovering, boosting demand. Yet, the electric vehicle (EV) segment is struggling. Despite the buzz, EV adoption remains sluggish. High prices and limited infrastructure are like heavy anchors, holding back progress.
The Crisil report paints a picture of cautious optimism. The PV industry is expected to grow at a modest 2-4%. This is a far cry from the 25% surge seen in FY23. The pandemic has left its mark, and the momentum has eased. OEMs are pivoting towards premiumisation. They are focusing on better product mixes to protect margins. This strategy is crucial as input costs rise and regulatory compliance becomes more demanding.
The fuel mix is evolving. Compressed natural gas (CNG) vehicles are gaining traction. Their share is projected to reach 15% this fiscal year. This shift is driven by low running costs and a growing network of refueling stations. The landscape is changing, and consumers are adapting.
However, the EV sector is facing headwinds. After doubling last year, growth has slowed. Penetration remains low at 3-3.5%. High prices and range anxiety are significant barriers. Many urban residents lack access to home charging, limiting EV adoption. For commercial fleets, uptime is critical. Without a reliable charging network, efficiency suffers.
Exports are also feeling the pinch. Growth is expected to moderate to 5-7% in FY26. Global headwinds are a concern. The 25% US tariff, effective June 2025, poses limited risk, as the US market accounts for just 1% of total PV volumes. OEMs can pivot to alternative markets, but geopolitical tensions could weigh on exports.
Despite these challenges, OEMs are resilient. They have hiked prices by 3-4% to offset rising costs. This, combined with a better-priced UV mix, is expected to keep operating margins steady at 12-12.5%. Cash flows remain healthy, allowing for continued investment in capacity and technology upgrades.
On the other side of the economic spectrum, Hindustan Zinc is thriving. The company reported a 33% profit increase, reaching US$ 1,224 million. This surge is fueled by record production levels. Mined and refined metal production hit all-time highs. The company’s revenue soared 18% year-on-year, reaching US$ 4,031 million.
Hindustan Zinc's success is attributed to improved operational efficiencies and a strong focus on digitalization. The integration of AI has streamlined processes, making the company one of the lowest-cost producers globally. The company’s Return on Capital Employed (ROCE) stands at an impressive 58%, leading the industry.
Free cash flow from operations reached US$ 1,630 million, providing a solid foundation for future growth. The company has consistently maintained an investment-grade rating of AAA from CRISIL. This stability allows Hindustan Zinc to navigate market fluctuations with confidence.
The zinc market is also witnessing a shift. With 25+ years of mine life and significant reserves, Hindustan Zinc is well-positioned to meet rising global demand. The company’s commitment to sustainability has earned it recognition as the world’s most sustainable metals and mining company.
As the automotive and zinc industries evolve, they reflect broader economic trends. The PV sector is grappling with challenges, while Hindustan Zinc is riding a wave of success. Both sectors must adapt to changing consumer preferences and market dynamics.
In the automotive world, the shift towards premiumisation is a response to evolving consumer expectations. As global premium EV models enter the market, Indian OEMs will need to accelerate technology upgrades. The competition will intensify, pushing manufacturers to innovate.
For Hindustan Zinc, the focus on operational efficiency and sustainability will be key. As demand for zinc rises, the company must balance production with environmental responsibility. The integration of technology will play a crucial role in achieving this balance.
In conclusion, India’s automotive and zinc industries are navigating a complex landscape. The PV sector faces challenges but is adapting through innovation and premiumisation. Hindustan Zinc, on the other hand, is thriving, leveraging operational efficiencies and sustainability. Both sectors will shape the future of India’s economy, each playing a vital role in the journey ahead. The road may be bumpy, but the destination is promising.
The passenger vehicle market is a tale of two stories. On one hand, utility vehicles (UVs) are driving growth. New launches and easing interest rates are like wind in their sails. The rural economy is also recovering, boosting demand. Yet, the electric vehicle (EV) segment is struggling. Despite the buzz, EV adoption remains sluggish. High prices and limited infrastructure are like heavy anchors, holding back progress.
The Crisil report paints a picture of cautious optimism. The PV industry is expected to grow at a modest 2-4%. This is a far cry from the 25% surge seen in FY23. The pandemic has left its mark, and the momentum has eased. OEMs are pivoting towards premiumisation. They are focusing on better product mixes to protect margins. This strategy is crucial as input costs rise and regulatory compliance becomes more demanding.
The fuel mix is evolving. Compressed natural gas (CNG) vehicles are gaining traction. Their share is projected to reach 15% this fiscal year. This shift is driven by low running costs and a growing network of refueling stations. The landscape is changing, and consumers are adapting.
However, the EV sector is facing headwinds. After doubling last year, growth has slowed. Penetration remains low at 3-3.5%. High prices and range anxiety are significant barriers. Many urban residents lack access to home charging, limiting EV adoption. For commercial fleets, uptime is critical. Without a reliable charging network, efficiency suffers.
Exports are also feeling the pinch. Growth is expected to moderate to 5-7% in FY26. Global headwinds are a concern. The 25% US tariff, effective June 2025, poses limited risk, as the US market accounts for just 1% of total PV volumes. OEMs can pivot to alternative markets, but geopolitical tensions could weigh on exports.
Despite these challenges, OEMs are resilient. They have hiked prices by 3-4% to offset rising costs. This, combined with a better-priced UV mix, is expected to keep operating margins steady at 12-12.5%. Cash flows remain healthy, allowing for continued investment in capacity and technology upgrades.
On the other side of the economic spectrum, Hindustan Zinc is thriving. The company reported a 33% profit increase, reaching US$ 1,224 million. This surge is fueled by record production levels. Mined and refined metal production hit all-time highs. The company’s revenue soared 18% year-on-year, reaching US$ 4,031 million.
Hindustan Zinc's success is attributed to improved operational efficiencies and a strong focus on digitalization. The integration of AI has streamlined processes, making the company one of the lowest-cost producers globally. The company’s Return on Capital Employed (ROCE) stands at an impressive 58%, leading the industry.
Free cash flow from operations reached US$ 1,630 million, providing a solid foundation for future growth. The company has consistently maintained an investment-grade rating of AAA from CRISIL. This stability allows Hindustan Zinc to navigate market fluctuations with confidence.
The zinc market is also witnessing a shift. With 25+ years of mine life and significant reserves, Hindustan Zinc is well-positioned to meet rising global demand. The company’s commitment to sustainability has earned it recognition as the world’s most sustainable metals and mining company.
As the automotive and zinc industries evolve, they reflect broader economic trends. The PV sector is grappling with challenges, while Hindustan Zinc is riding a wave of success. Both sectors must adapt to changing consumer preferences and market dynamics.
In the automotive world, the shift towards premiumisation is a response to evolving consumer expectations. As global premium EV models enter the market, Indian OEMs will need to accelerate technology upgrades. The competition will intensify, pushing manufacturers to innovate.
For Hindustan Zinc, the focus on operational efficiency and sustainability will be key. As demand for zinc rises, the company must balance production with environmental responsibility. The integration of technology will play a crucial role in achieving this balance.
In conclusion, India’s automotive and zinc industries are navigating a complex landscape. The PV sector faces challenges but is adapting through innovation and premiumisation. Hindustan Zinc, on the other hand, is thriving, leveraging operational efficiencies and sustainability. Both sectors will shape the future of India’s economy, each playing a vital role in the journey ahead. The road may be bumpy, but the destination is promising.