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India is switching to automatic when it comes to personal mobility. Worsening traffic congestion in cities along with improved technology and fuel efficiency are increasingly pushing buyers towards the gearless and clutchless convenience of automatic cars.

India’s market for two-pedal cars and SUVs has almost doubled in the past two years and accounted for 10-12% of the overall passenger vehicle market at around 3.5-3.7 lakh units during the fiscal year 2018, including automated manual transmission vehicles. The market is expected to cross half a million by the end of 2019, industry sources say.

The share of automatics in India was less than 5% three years ago in passenger vehicles. Industry experts say the segment has the potential to account for up to 40% of the total market in five years. Of course, the share of ATMs in China is around 50% and in the developed markets of the United States, Japan or Korea, it reaches 80 to 90%. While India has started slowly in space, it is rapidly closing the gap with the rest of the world with the rapid pace of growth.

One indicator of the growing popularity of automatic cars is the number of bookings for newly launched cars – around 65% of Toyota Yaris bookings are for automatic variants, while for the new Honda Amaze it is around 30%. “We see the demand trend increasing in the near future due to the convenience that the automatic transmission vehicle provides to customers,” said N Raja, deputy general manager of Toyota Kirloskar.

Thanks to the rise of Ubers and Olas, there is a shortage of drivers in major cities, making them expensive to hire. Vehicle owners who end up driving their cars therefore prefer an automatic because it is more convenient to negotiate in the city. At the end of fiscal 2018, automatic cars accounted for 8.5% of Maruti Suzuki’s sales – the share was small compared to others as the company primarily caters to the mass market.

The automotive market leader sold 1.53 lakh of automatic vehicles last year, an expansion of 65% from the previous year. In the current year, he envisions growth of over 30% in the segment with sales of over 2 lakh units, with the Dzire and Brezza being added to the lineup. In the passenger car space under Rs 12 lakh, automatic transmission accounts for 12-14%. However, the share rises to over 50% for cars priced above that.

In the SUV space, people still prefer manual transmission, although the share of automatic is increasing there as well. As the price increases, the share of automatic cars increases. For Hyundai Motor India and Honda Cars India, around 18-20% of sales come from automatic versions. For Toyota, it is even higher at 30%. Established brands like City, Jazz, Creta and Innova have seen sales of automatic versions range between 20 and 40 percent.

Even for local players Tata Motors and Mahindra & Mahindra, the share is 10-15% of models for which an automatic option is available. Once perceived as expensive, the automatic car segment has seen the price premium over manual cars drop to Rs 40,000 with the arrival of automated manual transmission (AMT).

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