Automakers brace for moderate sales after a record 2023; gear up for more EVs

After registering record-breaking sales volume in 2023, the Indian auto industry is driving into the new year with a potential moderate sales projection. PTI has reported that the Indian automobile industry is driving into the new year being aware of a lurking moderation in sales growth. However, the industry is ready to embrace cleaner powertrain technologies, which will be led by electric vehicles, the report claims.

Passenger vehicle sales are expected to cross 40 lakh units in 2023. With the automakers already announced price hikes for their vehicles effective from January 2024, sales of the vehicles are likely to see a negative impact. Amid growing inflation, price hikes for cars might result in a drop in the number of new passenger vehicle sales.

Maruti Suzuki projects a moderate sales outlook

Maruti Suzuki India's chairman RC Bhargava has reportedly said that the sales of passenger vehicles in India are expected to moderate a bit in 2024 compared to 2023. Interestingly, he noted that the revival of the small car segment is necessary for the faster growth of the industry.

Bhargava's comment comes at a time when the diminishing sales of small cars across India has become a growing concern for automakers such as Maruti Suzuki and Hyundai, as buyers are showing more inclination towards SUVs. The share of entry-level cars in the passenger vehicle segment stood at around 14 per cent in 2018-19, which has been reduced to around four per cent in the April-October period of 2023.

Speaking about the growth of Maruti Suzuki, Bhargava reportedly projected a higher growth for the automaker than the industry. "As far as Maruti Suzuki is concerned, I believe that we will have higher growth than the industry," Bhargava said. He also sounds positive about the growth of electric vehicle sales in 2024. The Maruti Suzuki official noted that the focus should be towards all the green powertrain technologies which help in meeting the carbon neutrality goals.

SUVs to continue passenger vehicle segment

SUVs have been the flavour of the season in 2023 and are expected to gain further momentum in 2024. Hyundai Motor India's COO Tarun Garg said that in 2023, the share of SUVs is expected to finish at around 49 per cent for the industry and 60 per cent for Hyundai. He expects the share of SUVs to grow substantially in 2024. "In 2024, we can expect the industry's SUV share to cross 50 per cent and the company's to go up beyond 60 per cent," Garg said.

Homegrown carmakers betting big on EVs

Tata Motors is one of the key players in the fossil fuel-driven passenger vehicle segment as well as the electric car market. Shailesh Chandra, Tata Motors Passenger Vehicles' Managing Director said the company will continue to launch new products across Internal Combustion Engine (ICE) and EVs. "We will integrate the new Sanand factory into our industrial footprint and unlock capacity. We plan to further drive deeper penetration of emission-friendly technologies by strengthening our portfolio of EVs and Compressed Natural Gas (CNG) cars," he said. Chandra also added that charging infrastructure growth remains the residual barrier to the mass adoption of EVs. He said that Tata Motors has initiated an open collaboration with key charging players to accelerate the growth of EV chargers to provide a better experience to electric car buyers.

Another homegrown auto giant Mahindra & Mahindra is also looking to charge up its electrification programme further as there is an increasing customer pull, a conducive policy environment and expanding charging infrastructure. Mahindra & Mahindra Auto & Farm Sectors (Executive Director & CEO) Rajesh Jejurikar said the Indian auto industry will witness an inflection point when the Born electric products start coming to the market in a significant manner. "M&M will bring its Born Electric portfolio starting 2025," he added. Overall, the automaker expects the industry to remain dynamic on account of the positive macroeconomic outlook, Jejurikar added.

Mercedes-Benz and Audi too upbeat about EVs

While mass-market carmakers are betting big on electric vehicles, luxury carmakers in India too are upbeat about electric powertrain technology. Mercedes-Benz India expects an increase in the EV penetration. Mercedes-Benz India MD & CEO Santosh Iyer said the customers require convincing of the ownership benefits and hassle-free experience of EVs over ICE vehicles. However, he believes the tipping point is still a few years away. Iyer noted that in line with the industry growth, the German automaker expects this year to be its best year ever amid supply chain disruptions.

Another luxury car manufacturer Audi is also hopeful about the electrification of its portfolio in India. Audi India Head Balbir Singh Dhillon said that as a brand, the company remains committed to enhancing the electric vehicle infrastructure in the country and continues to invest in expanding the brand's charging network. As for the 2024 outlook, he said the year 2023 marked a strong performance in the luxury car segment, propelled by consistent demand. “Looking ahead, we remain confident about the growth prospects of the luxury car segment in 2024," he added.

SIAM optimistic about FAME scheme extension

Society of Indian Automobile Manufacturers (SIAM), the apex body of Indian automobile manufacturers, projects a positive sales outlook for the year 2024. Rajesh Menon, Director General of SIAM reportedly said that the overall outlook for the Indian automobile industry in 2024 looks good. He attributed the positive sales outlook to the all-round economic growth of the country. "The overall outlook for the Indian automobile industry in 2024 looks good which can be attributed to the all-round economic growth of the country, which is also enabled by the conducive policy environment of the government," Menon said.

Electric vehicles have been growing multifold across India over the last few years. SIAM expects the EV industry too continue the momentum in 2024 as well across different segments. "Though this phase of the FAME Scheme is scheduled to conclude in March 2024, we as an industry are optimistic that the Government of India will introduce another version of the FAME scheme beyond March 2024," Menon said. He also added that continuation of the FAME scheme after March 2024 will not only help the consumers but would also enable the EV industry to further scale up and provide a wide range of products to the buyers.

Federation of Automobile Dealers Associations (FADA) President Manish Raj Singhania believes the outlook for green technologies and electrification in the automotive sector remains promising. He also said the automobile sector is poised for steady growth next year with an expected low single-digit growth in passenger vehicles and high single-digit growth in two-wheelers.