The passenger vehicle segment is poised to reach new heights this fiscal year, surpassing 4 million units in sales. Sport utility vehicles (SUVs) are driving the demand, accounting for nearly half of the total volume.
Passenger vehicle sales, which were at 2.5 million units a decade ago, have gained momentum after a minor setback during the initial period of the Covid pandemic. Sales reached 3.8 million units in the fiscal year ending March 31, 2023, setting a new record that will be surpassed this year with an estimated growth to 4.1 million units, according to industry experts.
SUV sales are projected to reach around 1.9 million units this year, a significant increase from 363,000 units 10 years ago in FY14. Data from automobile consultancy Jato Dynamics indicates that the share of hatchbacks and sedans in the sales mix has declined from 71% to 40% over the past decade.
SUVs continue to be the driving force for car companies, making up nearly 60% of total sales compared to the industry average of 46-47%, according to Tarun Garg, chief operating officer at Hyundai Motor India. Hyundai offers a range of SUVs across different price segments and has seen an increasing number of first-time buyers preferring SUVs.
Change in Consumer Preferences
The number of passenger vehicle models available for sale has also decreased from 107 to 87 over the past decade, according to data from Jato Dynamics. Maruti Suzuki, maintaining a market share of over 42% in the passenger vehicle segment for the past 10 years, has seen SUVs become a significant contributor to its sales mix. On the other hand, the share of small cars, which were once the company’s mainstay, has declined.
The past decade has not only witnessed a shift in consumer preferences towards SUVs, but also towards petrol-powered vehicles. Industry experts predict that petrol vehicles will hold a market share of 66% in FY24, up from 41% in FY14, while demand for diesel vehicles is expected to decrease from 51% to 18% in the same period.
“While the decline in diesel vehicle sales can be attributed to environmental concerns and stricter emission regulations, many SUVs, MPVs, and vans still retail in the diesel segment,” said Ravi Bhatia, president of Jato Dynamics. Alternative fuel options such as CNG, electric vehicles (EVs), and hybrids are also gaining popularity, reflecting a growing consumer preference for cleaner and more cost-effective fuels.
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