In fiscal year 2019, over four million passenger vehicles were produced across India. The production volume took around seven years to increase from three million to four million within the segment. From the production volume of over four million, around three million of the produced units were sold domestically. Small and mid-sized car sales accounted for about 13 percent of the sales share. Hatchback crossovers and compact SUVs have gained immense momentum in the past five years in the passenger vehicle segment.
In 2018, SUVs had a share of about 25 percent in passenger vehicles sales across India. The boost in sales came by combining the comfort and feasibility of SUVs to relatively small chassis of hatchbacks to create the perfect blend for roads in India in terms of maneuverability, size and practicality of the vehicle. The Vitara Brezza was the best-selling compact SUV across the country in 2019. The compact SUV sold over five hundred thousand units within four year of its launch.
Maruti Suzuki was the leading passenger vehicle manufacturer in 2018. The company introduced its mini-SUV, the S-Presso, to keep up with market trends in September 2018. The competition in the market has increased with the arrival of Kia and MG, with Chinese manufacturers Wall Motors and Haima Automobiles are also set to enter the Indian market.
The prolonged recession that started late in 2018, however, had severe impacts on the domestic passenger vehicle industry in India. Several factors including price hikes in fuel and interest rates, insurance and emission standards in combination with the economic slowdown created several headwinds for the segment. 2019 was the worst year for the passenger vehicle industry in India where the growth was reduced by about 16 percent. Profitability in the sector presumably will not start until the economy has been stabilized. Being a discretionary spend, new-car purchases are most likely to suffer with the economy. For the need-based buyers, used car markets could become the more optimal solution.