The healthy growth was helped by the PV segment's best-ever sales in the month of March 2023, where the collective OEM despatches stood at 3.46 lakh units - making it the highest-ever industry despatches in the month of March as yet.
01 Apr 2023 | 14373 Views | By Mayank Dhingra and Ketan Thakkar
The Indian passenger vehicle (PV) market has ended an impressive financial year FY23 with annual sales of 3.89 million units, posting a year-on-year growth of 26.7 percent (FY22: 3.07 million) - the highest-ever annual growth in more than a decade when the previous peak was achieved in FY18 at 3.37 ...
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The Indian passenger vehicle (PV) market has ended an impressive financial year FY23 with annual sales of 3.89 million units, posting a year-on-year growth of 26.7 percent (FY22: 3.07 million) - the highest-ever annual growth in more than a decade when the previous peak was achieved in FY18 at 3.37 million units.
The healthy growth was helped by the PV segment's best-ever sales in the month of March 2023, where the collective OEM despatches stood at 3.46 lakh units - making it the highest-ever industry despatches in the month of March as yet.
However, the year-on-year growth rate for March 2023 came down to 4.5 percent over March 2022, underlining the fact that the high base is catching up and the industry is poised for correction with a single-digit growth expected in FY24, amid a series of headwinds such as inflation, high interest rates and rural market slowdown.
Reviewing the year FY23, Shashank Srivastava, senior executive officer, Marketing and Sales, MSIL, said, "This is the highest-ever volumes in a year registered by the industry as well as Maruti Suzuki India, despite facing a lot of issues pertaining to supplies, and we continue to face the semiconductor shortage.
"Given the current circumstances, we expect the PV industry to register a growth of 5-7% in FY24. We are maintaining the industry projection of achieving 4.05 million to 4.1 million-unit sales for next year."
Uptick in retail, red flags for growth
Even the retail sales registered a healthy growth by clocking overall numbers of almost 38 lakh units (FY22: 30.70 lakh / +23.9%), with the inventory available at dealers having been slightly reduced to 2.04 lakh units at the end of the FY23. However, the PV segment is witnessing some reduction in demand and according to Srivastava, it is a tale of two cities.
"There are some models where the availability is much better than the overall demand, and then there are others where there is a huge pending order situation, and a long waiting list because the availability is not enough," Srivastava said.
For Maruti Suzuki India, while its models like the Celerio, S-Presso, Wagon R, and Alto are readily available in the marketplace along with some offers, models like the Ertiga, XL6, Dzire, Grand Vitara, and Brezza are witnessing long waiting periods with the demand being significantly higher.
"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," explained Srivastava.
On the challenges ahead, Srivastava highlighted and 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. The volatile geo-political situation may further impact fuel as well as commodity prices, and the rural sentiment has gone down in the last couple of weeks because of the unseasonal rainfall especially during the time of crop harvesting."
"Lastly, the implementation of BS VI Phase-II norms would lead to upward price revisions, including those from Maruti. These are some of the factors which can impact negatively and we are closely monitoring the space," he added. MSIL has rolled out an average price hike of 0.8 percent of the ex-showroom price, effective April 1, and varying on different cars depending upon their model and variant.
MSIL's healthy order book
The Maruti Suzuki WagonR, Baleno, Alto, and Swift, the Tata Nexon and the Maruti Suzuki Dzire emerged as the Top 5 passenger vehicle models in FY23. Srivastava updated that MSIL's current order backlog stands at 3.8 lakh units, with the newly-unveiled Fronx and Jimny having a combined booking number of over 41,000 units.
The company is hoping to outpace the market in FY24, led by its new range of SUVs. The SUV segment emerged as the fastest-growing segment in India in FY23 and registered a 35.9 percent year-on-year uptick. Despite lesser growth compared to the SUV segment, the hatchback segment too egistered a noticeable growth of 20 percent, with cumulative sales of 13.4 lakh units in FY23, against 11.60 lakh units in FY22. "While there has been a noticeable growth, it is lesser compared to other segments where the growth is much stronger. We expect the hatchback segment to remain flat in the next year," Srivastava said.
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 MSIL 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.