Market leaders predict a 5-7 percent growth in FY2024 for the industry under the current circumstances
In financial year 2023 (April 2022 to March 2023), the Indian passenger vehicle market registered annual sales of 38.8 lakh units, with a growth of 26.7 percent – the highest ever in more than a decade. The healthy growth was helped by record sales in the month of March 2023, where the despatches stood at 3.36 lakh units, versus 3.22 lakh units last year – making it the highest ever industry despatches in any March as yet.
Maruti Suzuki led the market in financial year 2023 with 16.06 lakh units, registering a year-on-year growth of 21 percent. Toyota witnessed their best year in sales in a decade with 13.38 lakh units, a year-on-year growth of 41 percent. A similar growth figure has been registered by Kia – 44 percent – but with total sales of 2.69 lakh units. Tata Motors saw a growth of 45 percent with total sales of nearly 5.39 lakh units.
The SUV segment emerged as the fastest-growing segment in India in FY23 and registered a 35.9 percent year-on-year uptick. Despite lower growth compared to the SUV segment, the hatchback segment registered a noticeable growth of 20 percent, with cumulative sales of 13.4 lakh units in FY23, against 11.60 lakh units in FY22.
However, the year-on-year industry growth rate for March 2023 came down to 4.5 percent over last March, underlining the fact that the industry is poised for correction with a single-digit growth expected in the new fiscal year amid a series of headwinds of inflation, interest rates, and rural market slowdown.
Maruti Suzuki sales since April 2022
Reviewing the financial year, Maruti Suzuki‘s senior executive officer, Marketing and Sales, Shashank Srivastava, said, “This is the highest ever volumes in a year registered by the industry and Maruti Suzuki, despite a lot of issues pertaining to supplies. We see next year a projection of 5-7 percent growth for the industry given the current circumstances – expecting numbers to 40.5 lakh to 41 lakh for next year.”
Even retail sales grew by a healthy digit and the stock in the industry has come down a little to 2.04 lakh units at the end of the financial year.
Srivastava says it is a tale of two cities – there are some models where the supply is much better than the overall demand, and there are some models, where there is a long waiting list because the supply is lower than the demand. Models like Celerio, S Presso, Wagon R are available with several offers, while with models like the Ertiga, XL6, Dzire, Grand Vitara, Brezza, the company is witnessing long waiting periods where the demand is high.
“There are mixed signals in the market. While March 2023 saw the industry clocking its highest-ever retail, however, the fresh booking rate has declined, which, in Maruti Suzuki India’s case, came down to 7 percent, including bookings for the yet-to-be-launched Fronx and Jimny, from the usual 13-14 percent. Therefore, there is a thought in the industry that the growth may be slackening,” he said.
While Maruti Suzuki was sitting on bookings of 3.8 lakh units, the newly unveiled Fronx and Jimny have combined bookings of over 41,000 units.
On the challenges ahead, Srivastava said, “There are some red flags which we are closely monitoring. These include the rise in interest rates and further tightening of rates by the RBI and its transmission to control inflation. The second factor is the overall economic growth which may impact the demand for automobiles. While the projection is currently pegged at 6.5 percent, there are some economists who have indicated a downward movement.”
Srivastava further explained, “The volatile geo-political situation may further impact fuel as well as commodity prices… Lastly, the implementation of BS VI Phase-II norms would lead to upward price revisions, including those from Maruti.”
The company is hoping to outpace the market in FY24, led by its new range of SUVs. The company, which launched its midsize SUV – Grand Vitara – in September 2022, says it will see the complete effect of the Hyundai Creta rival on its annual sales only in FY24 as it was launched midway in FY23. “With the Grand Vitara, along with the additional numbers of the soon-to-be-launched Fronx and Jimny, it is quite possible that Maruti Suzuki may breach the 2-million mark in FY24, however it depends a lot on production and the demand pattern in the market,” Srivastava signed off.
Ketan Thakkar, Mayank Dhingra
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