India, one of the world’s fastest-growing economies, has witnessed remarkable growth in its automobile sector in 2023. The year witnessed Indians indulging more in two-wheelers (2W) than any other vehicle category, marking a significant shift in buying patterns. The total number of vehicle retail sales in India increased 11.1% YoY in CY 2023, reaching an impressive 23.87 million (23,867,990 units, to be precise). An intriguing aspect was the end-of-year surge, with almost 30% of these vehicles being sold in the final quarter.
Between October and December 2023, India’s vehicle retail sales increased 9.68% YoY to 6.96 million units, according to Federation of Automobile Dealers Associations (FADA) data.
Delving deeper, two-wheelers continued their dominance, making up a staggering 71.48% of all vehicles sold in 2023, totalling 17.1 million units. Despite such massive numbers, the YoY growth was a steady 9.45%. In contrast, 3W sales painted a different picture altogether. With a colossal 58.5% YoY growth, 3W vehicle retail sales in India culminated at 1.08 million units, accounting for 4.53% of the total vehicles sold during the year.
The spike in India’s automobile retail sales in both the 2W and 3W categories was largely propelled by the festive and wedding seasons, ranging from 15th October to 25th November 2023. Within the 2W vehicle segment, factors like countless marriages, the disbursal of harvest payments to farmers, a plethora of new model choices, favourable climatic conditions, and a buoyant market sentiment were instrumental in driving sales growth. Moreover, the looming price adjustments expected in January 2024 further intensified the buying spree. The segment also benefited from an enriched product acceptance, especially resonating with the younger demographic.
Strong Demand for SUVs
The sales of Passenger Vehicles (PV), Tractors (TRAC) and Commercial Vehicles (CV) grew at a notable rate of 10.61% YoY, 7.09% YoY and 8.28% YoY, respectively, in CY 2023.
The PV retail sales in India stood at 3.86 million (3,860,268 units) by the end of 2023, representing 16.17% of all vehicle retail sales. The demand for SUVs was particularly robust, leading to extended waiting periods for certain flagship models. This heightened demand was stimulated by robust year-end marketing campaigns and the rollout of new models. Despite this, the industry grappled with an overhang of elevated inventory levels, signalling an imbalance in supply and demand.
Tractors and CV retail sales stood at 871,627 units and 994,330 units, respectively, in 2023.
The growth in commercial vehicle retail sales in India during 2023 was largely driven by the expansion of industrial ventures and infrastructural projects. The bus segment, in particular, experienced heightened demand, deriving significant advantages from the flourishing tourism sector and transportation services managed by state authorities.
Furthermore, the strong financial liquidity in rural regions, coupled with the economic gains from agricultural produce sales, bolstered consumer buying power.
The year 2023 redefined India’s auto retail industry, painting a picture of evolving customer preferences and shifting gears. Two-wheelers cruised to the forefront, while SUVs carved their own niche, leaving onlookers wondering – what’s next in the Indian auto arena? This year’s tale might be over, but the road ahead promises surprises in every mile.
