India's passenger vehicle sales reached an all-time high in the fiscal year 2022-23, with over 3.9 million units sold, thanks to the easing of chip shortages and the rising demand for sport utility vehicles (SUVs). According to the Society of Indian Automobile Manufacturers (SIAM), sales of SUVs made up more than 50% of total passenger vehicle sales, exceeding expectations. However, sales of entry-level vehicles experienced difficulties.
Despite year-round rising inflation, automakers have concentrated on making SUVs to satisfy customer demand. Sales of two-wheelers, a sign of the well-being of India's lower- to middle-income households, rose by 16.9% as well.
SIAM president Vinod Aggarwal said that the high sales were due to the easing of global recessionary concerns and that he expects the Indian auto industry to perform well in the coming year if the economy remains strong and monsoons are good. However, sales of small entry-level cars fell by 57% to 252,000 units, due to new emission regulations increasing the manufacturing cost, leading to increased costs for consumers.
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More than 2 million utility cars were sold, driven by customer demand and purchases made in advance of the implementation of stricter fuel emission regulations. The increase in sales towards the end of the year was also influenced by the robust demand throughout the festival season like Holi and Ugadi.
Despite the record-breaking sales, the Federation of Automobile Dealers Associations (FADA) has predicted that growth will taper to a low single-digit percentage in the current fiscal year due to inflation, carmakers' price hikes, and regulatory changes. In order to offset rising input costs brought on by inflation as well as new safety and pollution standards, automakers including Maruti Suzuki India Ltd and Hero MotoCorp Ltd have already increased their pricing.
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