Hyundai, Tata Motors, Mahindra & Mahindra, and Toyota were the only companies to achieve new peak sales figures in a year marked by strong car sales, primarily influenced by weakened demand in the lower-end market segment. For instance, despite reaching 1.71 million units, market leader Maruti Suzuki fell short of its pre-Covid record of 1.73 million units registered in 2018.
Recording 84,289 units in sales last year, Honda experienced a significant decline from its peak volume of 202,403 units in 2015. Similarly, Volkswagen fell short at 43,481 units sold, failing to reach its 2012 high of 66,783 units. Renault-Nissan also struggled to match its previous sales record in 2016, as per a report by the Economic Times.
The local market saw 4.1 million vehicles sold in 2023, marking an 8.2 per cent increase from the previous year. The compounded annual growth rate over the five-year period leading up to 2023 stood at 4.2 per cent.
Shashank Srivastava, Maruti Suzuki's senior executive officer for marketing and sales, told ET that over the past three to four years, there has been a surge of 25-30 per cent in prices, surpassing the growth in income levels for consumers in the lower segment of the market.
With affordability taking a hit, the sales of small cars, once the market's mainstay, have been impacted. There's also a shift in the market profile, with younger buyers increasingly preferring sports utility vehicles (SUVs) or cars resembling them, as their aspirations evolve. As a result, small, entry-level cars are not in high demand among this demographic.
Economists note that up to 65 per cent of the nation's population is under the age of 35, a demographic expected to drive consumption across various industries in the upcoming years. The International Monetary Fund (IMF) anticipates that India will achieve a $5 trillion economy, securing the third-highest GDP by FY2028.