Automatic transmission to account for over 15% of cars owned by 2020 in India: Report

An increasing number of car buyers are choosing to go for Automatic Transmission (AT) than Manual Transmission (MT). Worsening traffic situation in cities is one of the major motivating factors for acceptance of the automatic vehicle, as it considerably reduces the fatigue level of the driver during bumper to bumper traffic movement, said a report by ICRA Research Services.

Considering increasing penetration of automatic manual transmission (AMT) in the entry level segment as well as improving awareness regarding automatic cars, it is expected that automatic car transmission will account for over 15% share (excluding luxury cars, which already has 90%+ penetration of AT) by FY2020.

Another reason was the declining cost differential between manual and automatic gearbox, owing to maturity in technology, has resulted in the rising trend of automatic transmission in models offered by Original Equipment Manufacturers (OEMs).

However, despite this MT continues to be the preferred choice due to lower cost (both upfront as well as over lifecycle towards maintenance). Whereas, automatic transmission was generally restricted to premium vehicle catering to a select audience, said the report.

AT has significantly high penetration (90%+) in the luxury segment (>Rs 30 lakh) but their penetration in the mass segment is quite low. AT vehicles constitute less than 5% in domestic new vehicle sales during FY2016 but their share is likely to cross the 15% level in the medium term.

The reason for this is AT is still considered a luxury feature amongst Indian car buyers, though rising awareness and usage of AT in entry level cars is slowly resulting in improving acceptance/penetration of AT in the domestic passenger vehicle market.

Today, the automatic transmission option is available in entry level cars like Nano and Alto K10, catering to a much wider car audience as compared to the AT option available few years back in the Rs 7 Lakh + price bracket.

Apart from the cost factor it also depends on the segment as well as the marketing policy of OEMs. As the report explains, “The Torque converter-based transmission is preferred in utility vehicles, whereas premium cars rely on CVT or DCT. Some OEMs like the VW Group as well as Ford provide automatic options under DCT only whereas some others like MSIL or Toyota provide the transmission type depending on the automotive segment (TC is preferred in UVs as compared to CVTs) or the target customer segment (AMT is preferred in entry segment due to lower cost).”

While developed countries have a much larger share of automatic cars than emerging markets, however it is not always the case. For instance in Europe about 80% of the cars are manual transmission. In India 95% of the cars sold have manual transmission.