Powered by SUVs, the car industry crossed the psychological 4-million mark for the first time in 2023, growing by 8% during the year. Companies, however, expect “flat to moderate” growth curve in the new year as concerns around interest rates and the end of pent-up demand are likely to slow down new purchases.
Car sales wrapped up 2023 with total sales at 41.1 lakh units, a growth of 8% over the 37.9 lakh cars sold in 2022.The industry, which was under pressure after Covid-induced lockdowns were announced around March of 2020, had experienced a massive turnaround when markets opened up again. The pandemic also gave a boost to personal mobility.
While shortage of semiconductors had dampened production for most parts of the Covid period – leading to huge waiting periods across many models from companies such as Mahindra & Mahindra, Maruti, Hyundai, Kia and Tata Motors – the gradual improvement in supplies has now seen most of the backlog getting cleared.
The industry, however, feels that going in the new year may not be as strong as in the previous years as the sales-base is now bigger, and backlogs are gone. “Going by the current analysis, it looks like growth would be muted and in single digits,” Shashank Srivastava, senior executive officer (sales & marketing) at Maruti Suzuki, said.
The good part for the industry is that the average selling price for vehicles has gone up to around Rs 11.5 lakh in 2023, against Rs 10.6 lakh last year, and Rs 8.2 lakh at the end of fiscal 2019-20. Talking about the reasons for the surge, Srivastava listed out the growing desire of buyers to opt for feature-rich vehicles, the rising share of SUVs, and the spike in retail prices.
Maruti sold a record 20-lakh units in 2023, which included 2.7 lakh units through exports. Hyundai, the second-biggest car company, also had a strong 2023 as its domestic sales crossed 6 lakh units for the first time, growing by 9%. COO Tarun Garg said the numbers had been powered by its SUV portfolio, and added that the country may emerge as the “bright spot” for the global automotive industry.
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