Indian Auto Industry Navigates Shift to Electric, Faces Challenges Amidst Record-Breaking 2023 Sales

Following a record-breaking sales volume in 2023, the Indian automobile industry is entering the new year with a potential moderate sales projection.

According to news agency PTI, the Indian automobile industry is heading into the new year with an eye on a possible slowdown in sales growth. The industry is ready to embrace cleaner powertrain technologies, which will be led by electric vehicles (EV), reports state.

Sales of passenger cars are predicted to surpass 40 lakh units by 2023. Furthermore, sales of the vehicles are probably going to suffer because the automakers have already announced price increases for their models, which will take effect in January 2024. Meanwhile, the price increases for cars could lead to a decline in the number of new passenger vehicle sales in the face of rising inflation.

SUVs will continue to dominate the passenger vehicle segment:

SUVs were the rage in 2023 and are predicted to continue to grow in popularity in 2024. According to Hyundai Motor India, COO Tarun Garg, the industry’s SUV share is predicted to reach roughly 49 per cent in 2023, while Hyundai’s share will stand at 60 per cent. He projects a significant increase in the SUV share by 2024.

Maruti Suzuki anticipates moderate sales growth:

According to Maruti Suzuki India, chairman, RC Bhargava, passenger vehicle sales in India are expected to moderate slightly in 2024 compared to 2023. Interestingly, he stated that the revival of the small car segment is required for the industry to grow faster. Bhargava’s remark comes at a time when automakers such as Maruti Suzuki and Hyundai are concerned about the declining sales of small cars in India, as buyers increasingly prefer SUVs. The share of entry-level cars in the passenger vehicle segment was around 14 per cent in 2018-19, but it is expected to fall to around 4 per cent in the April-October 2023 period.

Domestic automakers are betting big on EVs:

Tata Motors is a major player in both the fossil-fuel-powered passenger vehicle segment and the electric car market. Tata Motors Passenger Vehicles Managing Director Shailesh Chandra stated that the company will continue to launch new products in the Internal Combustion Engine (ICE) and EV segments. Chandra also stated that the expansion of charging infrastructure remains a barrier to the widespread adoption of EVs. He stated that Tata Motors has begun an open collaboration with key charging players to accelerate the growth of EV chargers and provide a better experience to electric vehicle buyers.

Mahindra & Mahindra, another domestic auto behemoth, is also seeking to intensify its electrification initiative due to growing consumer interest, a supportive regulatory framework, and an expanding infrastructure of charging stations.