Bumper year for Indian auto industry: Luxury cars demand doubles, EVs grow by 50 percent

2023 has been a bumper year in terms of car sales and growth of the automotive industry, with the sector expecting to clock 4.22 million unit sales by the end of the calendar year. While the fight for market share was fierce among top carmakers such as Maruti Suzuki and Hyundai India, demand also doubled for cars of luxury brands such as BMW India, Mercedes-Benz and Audi India. However, both mass-market and luxury brands were seen converging to a single point of focus as well, which was the electric vehicle. From the Tata Tiago EV and MG Comet to the Audi Q8 e-tron, BMW i7 and the Mercedes-Benz EQE, action in the EV space has picked up pace throughout the year and this also includes the majority segment of electric two-wheelers. 2023 saw the premiumisation of the electric two-wheeler segment with the introduction of flagship products such as the TVS X, Ultraviolette F77 and more. However, will 2024 continue the upward trajectory of the automotive industry or should we expect it to flatline?

According to Vinay Raghunath, Partner, Automotive and Mobility Sector Leader, Ernst & Young India, “The luxury car segment in India has bounced back from the pandemic impact and showing nearly double-digit growth in 2023, should continue to witness robust growth in 2024 and also deliver one of the best years from an overall volume standpoint. The aggressive launch of new products by existing players spanning multiple price points and powertrains, a growing segment of consumers with rising disposable incomes and an ever-growing luxury pre-owned market should be strong tailwinds for this segment.” On the EV front, Raghunath confirmed, “The Electric Vehicle industry in India grew by nearly 50% in sales during the first 11 months of 2023 (Jan-Nov) spanning two-wheelers, three-wheelers, passenger vehicles, commercial vehicles and buses. In 2024 we can expect continued growth and an increasing penetration of electric vehicles in the two-wheeler and three-wheeler sub-segments. We may also see an increased activity in the ebus segment under the PM E-Bus Seva scheme which aims to introduce 10,000 electric buses across 169 eligible cities through a public-private partnership model.”

Sharing the optimism with Raghunath, Balbir Singh Dhillon, Head of Audi India confirmed that the brand has registered a growth of 88 percent in the first nine months of 2023 and attributed the growth to an uptick in indulgence, increase in disposable incomes and a strong economy. “The festive season this year brought grander celebrations for us, as we experienced the best-ever festive sales in the past seven years. Our newly introduced models such as the Audi Q3 Sportback, Q8 e-tron and the Q8 Sportback e-tron have received a compelling response. 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.” Dhillon said.

Pitching in on behalf of India’s electric vehicle landscape, Anant Badjatya, CEO, SUN Mobility told TOI Auto, “Looking ahead, 2024 promises to be an even more transformative year for the battery-swapping industry. With governments expected to implement supportive policy frameworks and guidelines, the stage is set for widespread adoption and exponential growth. SUN Mobility, positioned at the forefront of this revolution, is poised to play a pivotal role in shaping the future of electric mobility”. Apart from the battery swapping sector, Badjatya also said that with environmental concerns at the forefront, EVs have emerged as the clear solution to combating tailpipe emissions and pollution.
One segment that raises concern:
While in terms of growth percentages, the luxury, EV and SUV segments seem to be flying high, there are still some segments that need both OEM and policy attention to ensure the industry’s sustained growth. The biggest example of such a segment is the small economy hatchback, once the top-selling car segment, demand for the hatchback has been on a consistent downturn and increases in purchasing cost due to emission norms and policy have further discouraged first-time car buyers and forced them to delay their car purchase decision. Bringing these buyers into the fold is the key to sustaining current growth margins according to industry veterans.
As part of the overall growth of the Indian automotive ecosystem, the ancillary and supplier partners also posted good growth on the back of increased vehicle sales.
On a positive note, Anuj Kathuria, President (India), JK Tyre and Industries, said, “As we conclude 2023, it is evident that the Indian automotive industry is transforming with remarkable advancements, whether it be vehicle safety assessment, stricter emission norms and the rapid shift from IC engines to electric vehicles. Coupled with continued fluctuations and global shifts, the tyre sector and the auto industry, have shown remarkable resilience and adaptability that has also been spurred by Government initiatives in both manufacturing and infrastructure in recent times.”

Overall, predictions for 2023 in 2022 warned of fluctuations and some headwinds but the strong growth of the Indian economy across segments is consistently driving growth for the automotive sector. After a record high for sales this year, It’ll be interesting to see if 2024 turns out to be an even better year for the Indian automotive sector or not.