India’s record car sales in 2023

COVID-19, depressed the passenger vehicle market across the world. India emerged as the fastest-growing market for a key reason. Semiconductor chips, important components for cars, went scarce due to the pandemic disrupting supply chains. And when the pandemic effect started waning, there was a big scramble for those chips. India was able to produce cars faster than other major markets because its cars have fewer chips. India’s passenger vehicle market, valued at Rs.4.5 trillion INRS, (4.5 lakh Crore) has been outpacing volume growth. It has just passed a milestone as annual volumes of cars, sedans and utility vehicles breached the four million mark for the first time in 2023. As per industry estimates, about 4.1 million passenger vehicles were sold in the local market in the last calendar year, an increase of around 8.2% compared with sales of 3.79 million units in 2022.
what’s behind the spike ?

The pandemic depressed the passenger vehicle market across the world. India emerged as the fastest-growing automobile market for a key reason. Semiconductor chips, important components for cars, went scarce due to the pandemic disrupting supply chains. And when the pandemic effect started waning, there was a big scramble for those chips. India was able to produce cars faster than other major markets because its cars have fewer chips.
But the major factor behind the record car sales in the last calendar year is the positive macro factors in the world’s fastest-growing major economy. Higher disposable incomes, growth of the middle class, better and more roads and highways, a propensity to travel more, and the pent-up demand from the pandemic have been accelerating India’s car market. Indians’ new-found craze for sports utility vehicles (SUVs) and a wider adoption of electric vehicles spearheaded the record sales last year.
“The PV industry is expected to (have) posted its highest ever sales in the calendar year 2023 (CY23), crossing the significant 4 million mark, supported by a strong supply situation, new nameplates launched in the SUV segment, and a robust demand during the longer festive period. Coming off a high base, the industry recorded a single-digit growth overall with the key highlight of this moderate rise being the sharp growth registered in emission-friendly product categories. Both EV and CNG segment.
The road ahead in 2024.

Overall, carmakers expect demand momentum in the market to remain strong in 2024 as the economy is expected to continue doing well. But sales are likely to go up in single-digits, on a high base. Drying of pent-up demand might impact sales and so can high interest rates that make the car loans expensive.

On the other hand, a large number of new launches will boost sales. More than two dozen new car models, including EVs, will be unveiled or go on sale in 2024, ET has reported. This will be the highest number of new model introductions in the non-luxury segment in the last few years. Besides EVs, these will include facelifts of existing models. A spate of new SUVs and EVs will surely attract more buyers.

New launches typically add 8-10% of total volume growth for automakers, potentially translating into 250,000-300,000 units of incremental volume, taking the domestic aggregate to a record 4.3-4.4 million units next year, ET has reported. That would make 2024 the third straight year of record annual sales volume for passenger vehicles.

Society of Indian Automobile Manufacturers (SIAM) Director General Rajesh Menon told PTI that the sales outlook remained positive for the industry going into next year. “The overall outlook for the Indian automobile industry in 2024 looks good which can be attributed to the all-round economic growth of the country, which is also enabled with the conducive policy environment of the government,” he said.

Sources : ET Online Last Updated: Jan 02, 2024