The standout stories include the insatiable demand for SUVs, the continued mainstreaming of electric vehicles, together with Maruti Suzuki stamping its dominance with seven out of the top ten selling cars in India.
2023 was a marquee year for the Indian automotive industry. Powered by sports utility vehicles (SUVs), passenger vehicle (PV) sales grew 8.2%, compared to 2022. From an estimated 3.79 units in 2022, sales crossed the magic four million mark to reach 4.1 million in 2023.
On the Up
Despite retail prices rising by a steep 10% due to surging input costs, SUV sales grew by 25%. With two million units in sales, SUVs accounted for just short of 50% of total PV sales in 2023. There are signs of SUVs continuing to build on their momentum in 2024, before stabilizing at around 52-54% of market share in the coming years.
While other categories, including both hatchbacks and sedans, continued to experience growth in CY 2023, they ceded ground to SUVs. Reflective of evolving consumer trends, sedans – which had a good run in 2023 – are poised to face a rocky road in the years ahead, although demand for hatchbacks is poised to remain relatively stable.
All major OEMs including Maruti, Hyundai, Mahindra & Mahindra, Tata Motors, MG Motors, and Toyota Kirloskar performed strongly both in terms of sales and production volumes in 2023.
India’s biggest car maker, Maruti Suzuki, continued to blitz the competition, racking up an exceptional two million in unit sales in 2023. Hyundai also had an exceptional year, registering record domestic production volumes and sales. India’s second largest car maker sold around 600,000+ units in 2023, increasing sales by 9% in 2023 compared to 2022.
Toyota had another solid with domestic sales run in 2023. MG Motors had a good year claiming an 18% growth in sales in 2023 over 2022. While December is traditionally characterized by sluggish sales as OEMs move to reduce old inventory, Mahindra & Mahindra and Tata Motors experienced ramped up PV sales in the last month of 2023, compared to the same period in 2022. While Mahindra rode on the back of its UVs, Tata Motors was energized by its electric vehicles (EVs).
Maruti had another stellar year, accounting for seven of the country’s top 10 best-selling cars in 2023. The Swift bagged top spot, closely trailed by the WagonR. Both these long-standing offerings from the Maruti portfolio laid claim to being the only two cars to register 200,000+ in sales over 2023. Maruti notched up other achievements: the Baleno was the highest selling premium hatchback, the Brezza was the top-selling SUV, the Eeco was India’s top selling van, and the Ertiga was the country’s most popular MPV. Tata Motors bagged two spots among the top 10 with its SUV offering and the Brezza’s closest competitor, the Nexon, and its entry level SUV offering, the Punch. Hyundai’s Creta was the most popular mid-size SUV in India last year.
Outlook for 2024
Following two straight years of exceptionally strong growth, the Indian automotive industry is sitting on a substantial sales base. As a result, while growth is anticipated for 2024, it is likely to be at a less buoyant pace. Industry insiders project modest growth of low single digits in the range of 3-4% for this year.
Growth drivers are set to include multiple new product launches, including new SUVs. At a broader level, a conducive macroeconomic condition will provide positive support. The impacts of improving infrastructure, increasing tourist travel, and strong festive sales will carry forward in 2024.
Evolving consumer expectations, whether in terms of the preference for SUVs or the demand for more in-vehicle features, will also boost sales growth in 2024. Another consumer trend that will intensify is the mainstreaming of EVs, with the industry nearly doubling in 2023.
Indeed, one big theme of 2023 was the intensifying tilt towards clean energy alternatives. EVs registered record growth, estimated at over 90% in CY 2023. New model availability, increasing charging infrastructure, and regulatory impetus emerged as key enablers. Trends indicate that the segment is likely to achieve 30-40% year-on-year growth in 2024, compared to the anticipated 3-4% growth of the overall PV industry.
Headwinds are likely to be felt in the form of potential ripple effects from the volatile global geopolitical environment related to the Russia-Ukraine conflict and the more recent Israel-Palestine one. A spike in interest rates might make loans dearer, resulting in subdued sales. Also, with pent up demand related to production slowdowns during covid, fulfilled in 2023, automakers will need to find innovative strategies to catalyze new car purchases.
With inputs from Amrita Shetty, Senior Manager – Communications & Content, Mobility
