India, one of the fastest growing economies in the world, achieved impressive growth in the automotive sector in 2023. This year saw a major change in purchasing patterns as Indians fell in love with two-wheelers (2W) more than any other category of vehicles. Total retail car sales in India grew by 11.1% year-on-year in 2023 to reach a staggering 23.87 million units (23,867,990 units). (To be exact, it is a unit). What’s interesting is the year-end spike, with almost 30% of these vehicles sold in the final quarter.
From October to December 2023, retail car sales in India increased by 9.68% year-on-year to 6.96 million units.
Digging deeper, Two-wheelers continued to dominate, accounting for 71.48% of all vehicles sold in 2023, totaling 17.1 million units. Despite these huge numbers, the year-over-year growth rate was a steady 9.45%. In contrast, 3W’s sales painted a very different picture. 3W car retail sales in India grew by an impressive 58.5% year-on-year to reach 1.08 million units, accounting for 4.53% of total vehicle sales for the year.
The surge in India’s auto retail sales in both 2W and 3W categories was primarily driven by the festive season and wedding season from October 15 to November 25, 2023. Within the 2W car segment, a myriad of marriage, harvest payment, and other factors come into play. Farmer demand, a wide selection of new models, favorable climatic conditions and positive market sentiment were the driving forces behind the sales increase. Moreover, the looming price correction expected in January 2024 has further intensified the panic buying. The segment also benefited from stronger product acceptance, particularly as it resonated with younger audiences.
Strong demand for SUVs
Sales of passenger vehicles (PV), tractors (TRAC), and commercial vehicles (CV) grew by 10.61% and 7.09% year-on-year, respectively, in 2023, with significant growth in commercial vehicles (CV).
By the end of 2023, retail sales of solar PV units in India stood at 3.86 million units (3,860,268 units), accounting for 16.17% of total retail vehicle sales. Demand for SUVs has been especially strong, resulting in long backorders for some flagship models. This increased demand was stimulated by strong marketing campaigns and new model launches at the end of the year. Nevertheless, the industry was dealing with high inventory levels that signaled an imbalance between supply and demand.
Retail sales of tractors and CVs in 2023 were 871,627 and 994,330 units, respectively.
India’s commercial vehicle retail sales growth in 2023 was primarily driven by expansion in industrial ventures and infrastructure projects. The bus sector in particular was in high demand and benefited greatly from the rise of the tourism sector and transport services managed by state authorities.
Furthermore, strong financial liquidity in rural areas, combined with economic benefits from the sale of agricultural products, strengthened the purchasing power of consumers.
2023 redefined the Indian auto retail industry, charting the evolution of customer preferences and shifting gears. While two-wheelers have risen to the forefront, SUVs have carved out a niche of their own, leaving onlookers wondering what will happen next in the Indian automotive sector? This year’s story may be over, but the road ahead promises surprises with every mile.