The Indian automobile industry is recognized as being among the top five globally. As one of the contributors to the economy, exports and employment, the industry is going through a huge level of disruption with mobility rapidly changing and given that products of the future are expected to have considerable intelligence and be environmentally friendly.


In India – from the changes in BS4-BS6 emission standards to the ongoing surge in electric vehicles, especially the two-wheeler segment – the automobile industry is experiencing an unanticipated situation. This is in the context of coming to terms with those new standards as well as the hit from Covid-19, which ensured that the auto industry would be among the most impacted industries, with job losses at small and medium-sized component manufacturers, inventories sitting in warehouses and given the impact of the semiconductor industry.


Traditionally, the automobile industry is categorised into four separate segments: two-wheelers (2Ws), three-wheelers (3Ws), passenger vehicles (PVs) and commercial vehicles (CVs). In the broader context, the industry is categorized into OEMs, component manufacturers and auto tech centres. These three sectors focus on enhanced mobility and have varied talent practices, and thus their own sets of challenges.

Sectoral breakdown of the industry

OEMs typically represent 20-25% of the overall industry and cover 2Ws, PVs and CVs. The majority of the OEMs in India are subsidiaries of global automakers, and people practices in this sector are mostly influenced by the parent organizations, thus resulting in mature rewards and recognition practices.


Component manufacturers represent the largest piece of the pie within the overall industry in terms of volume and headcount. In India, these are a mix of local and global players that work very closely with OEMs to provide support for final products.


Auto tech is a sector that goes beyond manufacturing and mechanical elements of the industry, being focused on vehicles’ technology-driven components and solutions, and it has a larger aim of deploying what is effectively a self-driving connected computer that uses environmentally friendly fuel. 

All three sectors focus on the common goal of providing enhanced mobility, and there are key people challenges they might face:

Upskilling the workforce: Transitioning an internal combustion engine to using a fuel that is more friendly to the environment and the wallet requires shifts in technology and skills across the industry’s sectors, with a particular focus on electric & autonomous vehicles. Upskilling and right-skilling talent is the challenge at hand.


High attrition: High talent movement is observed across sectors, and the growing presence of luxury and global OEMs has created a rise in management, sales and leadership role opportunities.

Auto tech competes with IT and internet companies in terms of meeting digital talent requirements, and industry-agnostic opportunities related to this talent pool result in high turnover.


A right mix of rewards elements: Traditionally, the automobile industry is not perceived as being among the top paying ones, as it mainly focuses on the cash component of rewards and less on flexibility and overall well-being. The current need is talent from the automotive and digital industries that can create a proper balance between cash and non-cash reward elements.


Overview of talent and reward trends across segments:


Hiring Outlook  2022

Turnover Rate


Key Jobs





Engineering & Production

Data Analytics

Battery Management


Component Manufacturers




Engineering & Production

Data Analytics

Sales & Marketing

Tech Centres




Data Science

Electronics Product Design Engineering




Positive sentiment and the way forward


The overall industry is on a fresh growth journey paved with positives such as the following:


  • The number of organizations reporting that they added staff grew from 30% in 2020 to 65% in 2021.
  • Fresh jobs are emerging across sectors within the industry, especially with regard to digital and skills supporting EVs.
  •  In 2020, the automobile industry saw far lower increments, or increments paid from pockets within the industry, with an average of 7-7.5%. However, 2021 was different, with increments and incentives flowing well and auto tech centres and 2Ws at the forefront. There was a median increment of 10% near the end of the year, with a higher allocation of the kitty towards IC and SME roles.
  • Skill-based pay/premiums are catching up at auto tech companies.
  • The variable pay component is gaining traction beyond the sales and marketing roles. Variable pay is also getting introduced at early career levels.

On the expectation that the disruption in the sector will continue, a shift of the industry towards being more focused on knowledge and learning is possible only through encouragement of STEM. The change in people practices is obvious and already gaining momentum. We note a few immediate priorities:


  • Building talent in-house, which requires a lot of upskilling and reskilling.
  • The right people practices – buying highly skilled talent from within a competitive market requires being aggressive not only with regard to offering attractive salaries, but also in terms of instituting engaging people practices.
  • Showcasing career progression – adoption of niche skills should lead to progressive career growth.
  • Competitive cash, personalized benefits and better working conditions to drive motivation at OEMs and component manufacturers.
  • Flexibility – apart from competitive cash and benefits compensation, the key motivators at auto tech centres are remote working, overall well-being and continuous learning.
  • A correct pay mix that leads to desired behaviours at various levels.

Clearly, a lot is happening behind the curtains as we get ready to on-board our autonomous and environmentally friendly car.



Junaid Sheikh

Principal Consultant 


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