Passenger vehicles set for new sales milestone of four million units in FY24

The passenger vehicle segment is all set to scale a new peak, selling more than 4 million units this fiscal year, with sport utility vehicles driving the demand by accounting for nearly half the volume.

Sales of passenger vehicles, which were 2.5 million units a decade ago, have picked up speed after a blip during the initial period of the Covid wave. Sales touched 3.8 million units in the fiscal year ended March 31, 2023, a record which will be broken this fiscal year with the number likely growing to 4.1 million units, according to industry experts.

SUV sales are projected to be around 1.9 million units this year, a multi-fold increase from 363,000 units 10 years ago in FY14. The share of hatchbacks and sedans in the sales mix fell to 40% from 71% in the past one decade, suggest data from automobile consultancy Jato Dynamics.

SUVs continue to be strong growth drivers for car companies, “contributing to nearly 60% of our total sales against the industry contribution of 46-47%”, said Tarun Garg, chief operating officer at Hyundai Motor India, which has a range of SUVs across price segments. “The percentage of first-time buyers preferring SUVs continues to go up…,” he said.
Meanwhile, the number of brands in the market has decreased with some manufacturers exiting the PV segment.

Change in consumer preferences

The number of PV models on sale also fell to 87 from 107 a decade ago, show data from Jato Dynamics.Maruti Suzuki has kept its PV market share of more than 42% in the past 10 years and SUVs now contribute significantly to the sales, said senior executive director Shashank Srivastava. Meanwhile, the share of the previously bread-and-butter small cars is falling in the automaker’s sales mix. The last decade has not only seen a change in consumer preferences for SUVs, but also towards petrol-powered vehicles, with industry experts expecting their market share reaching 66% in FY24 from 41% in FY14. In the same period, demand for diesel vehicles is projected to decrease to 18% from 51%.

“While this decline (in diesel vehicle sales) may be attributed to environmental concerns and stricter emissions regulations; many SUVs, MPVs and vans continue to retail in the diesel segment,” said Ravi Bhatia, president of Jato Dynamics. CNG, EVs and hybrids too are steadily gaining traction as alternative fuel options, reflecting increased consumer preference towards cleaner and more cost-effective fuel choices.


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