Passenger vehicle production
In fiscal year 2022, over 3.6 million passenger vehicles were produced across India. The production volume reached peak at over four million in fiscal year 2019 within the segment. The majority of the produced units were sold domestically. Small and mid-sized cars dominate this market. Hatchback crossovers and compact SUVs have gained immense momentum in the past few years in the passenger vehicle segment.In 2022, SUVs had a share of about 42 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. Maruti Suzuki was the leading passenger vehicle manufacturer with the highest market share in the passenger vehicle segment. The competition has increased with the arrival of Kia and MG to the Indian market.
Bumpy road ahead
The 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. The impact was further prolonged by the coronavirus pandemic. 2020 was the worst year for the passenger vehicle industry in India so far where the market size was reduced to 2013 level. 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.
