Rural demand & SUVs propel India’s record-breaking car sales in FY24

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By: HT Auto Desk
| Updated on: 02 Apr 2024, 07:01 AM

Rapid surges in SUV sales have propelled the growth in rural market sales for all the carmakers in India, while demand for small cars has slumped sign

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SUV
Rapid surges in SUV sales have propelled the growth in rural market sales for all the carmakers in India, while demand for small cars has slumped significantly.

Rural India emerged as the driving force behind the record-breaking sales of passenger vehicle sales in FY24. After registering 41.2 lakh passenger vehicles in the CY23, now the Indian auto industry has sold 40 lakh PVs for the first time in a financial year in FY2024, reported Mint. Interestingly, this growth came despite the sliding numbers of hatchbacks, which conventionally remained the driving force behind the Indian passenger vehicle market as well as the rural PV sales.

The report has stated that in FY24, the Indian passenger vehicle market registered a total of 42.3 lakh units and one in every two cars sold in the country were SUVs. The overall passenger vehicle market in the country witnessed an 8.7 per cent year-on-year (YoY) growth over the 38.9 lakh cars sold in the previous financial year, which was another record for the Indian auto industry. Clearly, the sales of the passenger vehicles are on the momentum of creating incremental growth records over the last two financial years.

All OEMs register record rural sales

All the major car manufacturers in India reportedly witnessed all-time-high sales in rural markets in the last financial year. The demand and sales in the rural markets even overtook the urban markets, where the most preferred vehicles are SUVs.

Speaking on the rural demand and sales of Maruti Suzuki, the country’s most-selling passenger vehicle brand, Shashank Srivastava, executive committee member of Maruti Suzuki, said that sales for the OEM in the rural market were 7.87 lakh units, registering an 11 per cent YoY growth. He added that it was much better than the OEM’s urban market growth. “Rural sales of 7.87 lakh units this year, a growth of 11% year-on-year, have been much better than urban growth. Rural growth for the year is about 11% and urban growth is about 7%. And so, this is the highest-ever rural sales that we saw, which also should be a very good signal for the economy,” Srivastava said.

The second bestselling carmaker in India, Hyundai, attributed the rise in rural sales to multiple factors such as infrastructure development, increased access to information, and improved road quality across the country. Tarun Garg, Chief Operating Officer of Hyundai Motor India, said that rural sales for the OEM, for which SUVs account for more than 60 per cent of its total sales, reached a record 19.44 per cent in FY24, up from the previous year’s 18 per cent. This means that nearly one in every five Hyundai cars sold in India in FY24 were sold in rural areas. This signified a burgeoning consumer base beyond urban markets.

For homegrown auto major Tata Motors, rural sales contribute around 40 per cent to the OEM’s total sales. In the past five years, Tata Motors claims to have witnessed a five-times increase in rural market growth. The report quoted a Tata Motors spokesperson revealing that models like Tata Nexon, Punch and Tiago were the company’s highest-selling passenger vehicles in the rural markets in FY24. The OEM also attributed this sales surge to models like Punch CNG and Tiago EV.

What’s driving the surge in rural PV sales

The SUV segment in the Indian passenger vehicle market has been growing at a rapid pace over the last couple of years and it was no different in FY24. In the last fiscal, one in every two passenger vehicles sold in India, were SUVs, becoming the driving factor behind the overall PV sales growth as well as the rural market also. The segment reportedly registered its sharpest growth of 28 per cent in the last fiscal, while sales of hatchbacks or small cars accounted for 28 per cent of the total PV sales volume. The sales of hatchbacks witnessed a 12 per cent slump in the just concluded fiscal, compared to the FY23.

This comes as a major shift in trend. Earlier, the rural markets mostly preferred small cars at the entry level, but over the last couple of years that seems to have changed with aspirations of rural consumers also rising. Speaking on this, Shashank Srivastava said that the percentage sales of smaller cars is still higher in rural areas, but the overall segment construct of the markets is converging. Key factors such as rising rural incomes, higher internet penetration and connectivity are leading this change, Srivastava said. He also said the exponential growth in rural sales isn’t an isolated phenomenon, but a culmination of various factors fostering economic buoyancy in the countryside. “There seems to be a convergence in the segment choices of the rural and the urban consumers with a small lag of time,” the Maruti Suzuki official added.

First Published Date: 02 Apr 2024, 07:01 AM IST

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Automakers hope to end FY24 on a positive note, shorter waiting periods ahead

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By: HT Auto Desk
| Updated on: 03 Mar 2024, 16:31 PM

  • Sales of passenger vehicles and two-wheelers posted a strong growth in February 2024.
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Sales of passenger vehicles and two-wheelers posted a strong growth in February 2024.

The inordinately long waiting periods for passenger vehicles may be ending as the carmakers continued to produce a record number of vehicles in February 2024, building up stock in their respective dealerships, claimed a report by LiveMint. The increasing retail demand has been playing a crucial role for the automakers to push for higher vehicle production.

The report further stated that the carmakers in India are keeping a close watch on market demand, as inventories, which have already reached 26 days, are likely to pile up in the dealerships with the OEMs having been able to cater to the pending orders and incremental sales depending solely on the pace of fresh demand.

Passenger vehicles to see lower waiting period

The report quoted India’s largest carmaker Maruti Suzuki’s Senior Executive Director Shashank Srivastava revealing that the Indian passenger vehicle industry expects to finish the current financial year with an 8.1 per cent growth rate at 42 lakh units.

In February 2024, the passenger vehicle segment in India recorded wholesales of 373,177 units as opposed to 335,324 units registered in February 2023, marking an 11.3 per cent year-on-year growth, Srivastava said. However, the retail numbers are lower than the wholesale figure, estimated to be around 335,900 units registered last month as compared to 301,900 units recorded in February 2023, which also registered an 11.3 per cent growth. However, the difference between wholesale and retail numbers was about 40,000 units, which have been added to the stock, revealed the Maruti Suzuki top official.

He also said that the stock level is now at 300,000 units, which is around 25-26 days of stock in the industry. “So far since July of last year, we have seen pending bookings significantly come down and stock in the channel had come down. But not only is it pretty high again, the luxury for OEMs to push wholesale against retail is not there anymore,” Srivastava reportedly said, further adding, “We saw that rural growth cumulatively was at 11.7 per cent between April and February, higher than growth in urban sales at eight per cent.”

SUVs driving growth in PV segment

SUVs have been driving demand and sales in the Indian passenger vehicle market, just like the rest of the global market. In February 2024 as well, SUVs accounted for more than 50 per cent of all passenger vehicle sales in India. Industry experts reportedly expect the SUV segment to contribute more than half of total passenger vehicle sales in the current financial year.

The launch of a host of new models in the last few months, and improved availability on the back of the eased supply chain have helped the automakers to post a strong growth in this segment.

Two-wheelers clock strong double-digit growth

Major two-wheeler manufacturers such as Hero MotoCorp, TVS Motor Company and Bajaj Auto have clocked a strong double-digit growth in February 2024, compared to the same month a year ago. However, registrations of two-wheelers grew at a much slower pace in February this year, at 13.2 per cent, claimed the report. This resulted in inventory addition at showrooms. The report also claimed that in the premium segment, higher demand helped Royal Enfield post a wholesale growth of a mere five per cent, whereas retail registrations shrank 1.3 per cent last month, compared to February 2023.

In the electric two-wheeler segment, sales remained flat in February 2024, reflecting a stagnation in demand. The report claimed that registrations of high-speed electric two-wheelers were up by 24 per cent on a year-on-year basis in February 2024. This was due to the extra day in February because 2024 is a leap year. However, the registrations in this category were flat last month compared to January at 81,963 units.

First Published Date: 03 Mar 2024, 16:31 PM IST

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