In 2023, the car industry reached a significant milestone by selling over 4 million cars for the first time. This growth, about 8% more than the previous year, was mainly driven by the popularity of SUVs. However, experts predict that the coming year might not see such robust growth due to concerns about interest rates and a decrease in the demand surge caused by the pandemic.
During the COVID-19 lockdowns in 2020, the car industry faced a lot of pressure, but when the markets reopened, there was a remarkable turnaround. The pandemic also encouraged more people to buy cars for their personal use, boosting the industry further. Although there were issues with the shortage of essential components like semiconductors, causing delays in production for various car models from companies like Mahindra & Mahindra, Maruti, Hyundai, Kia, and Tata Motors, the situation has gradually improved, and most of the backlog has been cleared.
However, moving into the new year, the industry doesn't anticipate the same strength in growth as before. This is because the sales base is now larger, and most of the backlog issues have been resolved. Shashank Srivastava, a senior executive at Maruti Suzuki, mentioned that based on their analysis, they expect the growth to be slower, possibly in the single digits.
On the bright side, the average selling price of vehicles increased to around Rs 11.5 lakh in 2023 from Rs 10.6 lakh in the previous year and Rs 8.2 lakh at the end of fiscal year 2019-20. Srivastava attributed this surge in prices to the increasing demand for feature-rich cars, the growing preference for SUVs, and the rise in retail prices.
Maruti had an exceptional year, selling a record-breaking 20 lakh units in 2023, including 2.7 lakh units through exports. Hyundai, the second-largest car company, also experienced a strong year with its domestic sales crossing 6 lakh units for the first time, marking a 9% growth. Tarun Garg, the Chief Operating Officer (COO) of Hyundai, credited their success to their SUV lineup. He also mentioned the possibility of India becoming a shining spot in the global automotive industry.
In simpler terms, the car industry had a fantastic year in 2023, selling more cars than ever before, largely due to the popularity of SUVs. However, the industry expects slower growth in the coming year due to various factors like interest rates and the decrease in pandemic-induced demand. Nonetheless, higher prices and strong sales by companies like Maruti and Hyundai indicate a positive trend in the market.