In the financial year 2023-24 (FY24), car sales in India reached a new high, with 4.23 million domestic passenger vehicles (PVs) sold. This represents an 8.74% increase compared to the previous year. The surge in sales was mainly due to the strong demand for sports utility vehicles (SUVs), robust growth in rural areas, and a high growth rate in the country's gross domestic product (GDP).
SUVs Take the Lead
The SUV segment experienced significant growth, with its market share in the total Indian PV market rising from 40.1% in FY22 to 50.4% in FY24. Shashank Srivastava, an executive committee member of Maruti Suzuki India (MSIL), mentioned that the SUV segment saw a 28% increase in volume in FY24. In contrast, sales of hatchbacks and sedans declined by 12% and 6%, respectively. The market share of SUVs is expected to reach around 54-55% by the end of FY25, with MSIL leading in this segment.
Rural Sales Driving Growth
Rural sales grew by 11% in FY24, outpacing urban sales growth of 7%. Srivastava attributed this robust growth in rural sales to rising income levels, substantial government investments in public infrastructure such as roads, and favorable monsoon conditions. The average salary ratio between urban and rural areas is currently at 1.8 and is expected to decrease to 1.4 in the coming years, further boosting rural growth. MSIL's domestic PV sales reached 1.759 million units in FY24, marking a 9.52% year-on-year increase.
Electric and Hybrid Cars
In FY24, around 99,000 electric cars and 89,500 hybrid cars were sold in India. Interestingly, in the past six months of FY24, sales of hybrid cars exceeded those of electric cars. Srivastava indicated that the auto industry is expected to see single-digit volume sales growth in FY25.
Hyundai's Record Sales
Hyundai Motor India (HMIL) also achieved its highest domestic sales in FY24, with 614,721 units sold, an 8.31% year-on-year growth. This success was largely driven by strong demand for its products, particularly in the SUV segment. Tarun Garg, the chief operating officer (COO) of HMIL, noted that SUV penetration reached a record 63%, up from 53% the previous year. HMIL introduced several new models and product upgrades in FY24, including the Exter, new Creta, new i-20, and the introduction of advanced driver-assistance systems (ADAS) in the Hyundai Venue and Venue N Line.
Future Outlook
The auto industry expects growth to moderate to low single digits of 2.5-3% in FY25 due to a higher base. However, the industry is expected to continue growing in rural areas. HMIL's rural market penetration increased to 19.44% in FY24, compared to 18.46% the previous year. Garg cited improved infrastructure, increased information flow, and growing demand for SUVs as reasons for this growth.