In the automotive industry, 2023 will be treated as a reference year during which a record was made of achieving four-million plus sales of passenger vehicles (PVs) despite shortage in semiconductor and parts supply.

Within the passenger vehicle segment, sports utility vehicle (SUV) continued to dominate the market -- whether it was micro SUVs or the big bulky ones. All-new SUVs like Maruti Jimny or Honda Elevate and Hyundai’s micro SUV ‘Exter’ saw their entries into the game while global luxury brands like Lotus and Aston Martin (re-entry) also entered the Indian market with an eye on the market share.

Apart from launching the most anticipated new models, the original equipment manufacturers (OEMs) also brought in refreshed versions of their existing models, especially in the SUV space, to attract new customers and first time buyers even in the age group of late 20s or early 30s.

In the first half of the calendar year, the high demand of PVs also led to the longer waiting period for up to even one year and an order book of more than four lakh vehicles. This gradually came down with the availability of semiconductors and better supply chain in the sector during the later half of the year.

In the festive season again, the industry (total vehicles across categories) made a record by selling around 38 lakh vehicles compared with around 32 lakh vehicles in the same period last year, and out of this, the PV sales contributed around 5.50 lakh units.

According to the companies, the steep growth witnessed by the industry was driven by post Covid pent up demand in early part of the year, the launch of several new vehicles and easing of the semiconductor shortage.

Even in the luxury cars segment, the year saw a record year in terms of sales and is expected to cross 45,000-47,000 units in 2023, which will be a highest-ever in the Indian luxury car market.

The market leader Mercedes-Benz India has already sold 12,768 units between January and September this year, which is a growth of 11 per cent year-on-year (y-o-y) compared with 11,469 units in the same period last year.

“Not only are we headed for another ‘Best Ever Year’, we have been able to lead with our customer experiences, create structural changes in the market and drive novel trends amongst the luxury car buyers,” Santosh Iyer, Managing Director and Chief Executive Officer, Mercedes-Benz India, said.

The other two German brands – Audi and BMW – are also reporting record-high numbers this year.

In the electric passenger vehicle segment also, the year has seen companies growing by multi-fold percentages in their sales as compared with 2022. Led by Tata Motors in the electric passenger vehicle segment, others such as MG Motor India, Mahindra & Mahindra, and even Chinese player BYD is progressing in sales.

The year also saw companies like Toyota Kirloskar Motor showcasing prototype of the world’s first BS 6 (Stage II) electrified flex fuel vehicle (Innova Hycross) through the hands of Nitin Gadkari, Minister of Road Transport and Highways, who has been advocating for clean fuel vehicles to replace the fossil fuel.

However, in the small car segment the market kept falling and demand from even smaller towns and rural areas were quite low owing to a lack of interest as they were also attracted towards SUVs or bigger vehicles with more features. Same trend were seen in the sedan segment too.

Two/ three wheelers

In the two-wheelers segment, the domestic market experienced a mixed trend in the first half of the calendar year, which improved towards the later half of the year, and doing much better during the festive season. Here too, the demand for commuter segment (100 cc to 125 cc) motorcycles saw a lower demand even from the rural markets as demand for premium bikes got into play.

In the scooter segment, the market experienced a tough war because of the competition from the EV side which were more in demand than their internal combustion engine (ICE) counterparts. The EV industry surged despite facing many challenges. In June, the subsidy on two-wheelers under the FAME II scheme was reduced from ₹15,000/kWh to ₹10,000/kWh of battery capacity. The maximum subsidy was also capped at 15 per cent of the price of the vehicle, down from 40 per cent. The new rules about battery homologation also impacted the supply of Evs.

Similar trends were seen in the three-wheeler segment where competition is rising from the battery/ electric-operated vehicles across the country. With support from the Centre and various State governments, the EVs are expected to grow multifold in 2024. With the extension of FAME-II programme by another two-three years and even likely announcement of FAME-III next year, the EV sector will be an interesting watch.

“However, the overall Indian EV ecosystem remains robust, and the future outlook remains exciting. A total of 13,74,137 EVs, across different segments, have been sold in 2023 (till November), which is 53 per cent more than last year. The Indian EV sector has raised over $780 million so far this year showing strong backing towards the sector. The sector can get a further boost if the Indian government includes the EV sector in the Priority Sector Lending (PSL) to drive ease of availability of finance,” Samarth Kholkar, CEO and Co-Founder at Blive, told businessline. Blive is a multi-brand electric vehicle platform.

Commercial vehicles/ Tractors

In the CV segment, demand continues to be driven by the infrastructure segment for medium and heavy commercial vehicles (MHCVs), with bus demand also picking up, led by order wins in various State transport departments. According to analysts, CV discounts have risen by 100-200bp from November levels and now stand at 8-10 per cent, with bigger fleet operators benefiting compared with small operators.

However, in the tractor segment, the year saw numbers dwindling and as agricultural demand remains challenging due to inconsistent rainfall in most parts of the country, the demand is expected to pick up after January only.

Bottom line

Overall, the auto industry is likely to do well in 2024 though growth would be in single digit from the high-base year. On the policies side, apart from continuation of FAME scheme, the production-linked incentive scheme in components as well as components will also see taking shape in 2024. The industry will also see several OEMs participating in the Bharat New Car Assessment Programme (BNCAP) that aims to promote safer vehicles and also help buyers to take an informed decision before purchasing their new cars.

Launched by Ministry of Road Transport and Highways (MoRTH) earlier this year, the BNCAP will work as an independent body where OEMs can send their cars voluntarily, to crash test and get star ratings on safety, accordingly. Also, there will be more clarity on Tesla’s entry into the Indian market as some concrete decisions are expected to take place from the government side as well as the company’s founder Elon Musk. Also, another American company Ford Motor’s re-entry to the Indian market will be fructified.

Related Topics
comment COMMENT NOW