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CY2022: Indian mass-market passenger vehicle industry analysis


  • CY2022 registered the highest-ever annual sales of 37,84,361 vehicles.

  • The average monthly volume in 2022 was 3,15,363—the highest in history.

  • 3,54,746 vehicle sales make September 2022 the best sales month in history.

  • Pent-up demand and an improved supply-side situation are the major driving factors.

Indian mass market PV industry

Pent-up demand and an easing supply chain shortage have resulted in the highest-ever passenger vehicle sales in 2022, despite several industry-specific headwinds like fuel and car price inflation, a hardening interest rate, and adverse foreign exchange movement. 2022 registered annual sales of 37,84,361 vehicles, a 23% growth over 2021. Growth was further propelled by some exciting new launches and high-level discounts on several products.

Peak (2018) to peak (2022) comparison

The previous highest sales were recorded in 2018. However, 2022 was very different, as the industry scored above 3 lakh dispatches in 8 out of the 12 months due to pent-up demand. In 2022, the average monthly volume was 3,15,363, the highest in history.

After a long time of prolonged gloom, the 2022 festive season was in full glory, and September 2022 became the month with the highest dispatch. Because the COVID-19 pandemic did not affect all income groups equally, there was a strong demand for higher-priced cars and their variants during the festive season. Easing supply chain shortages ensured that demand was well catered to during September, October, and November.

Automotive industry growth is asymmetric since 2020

The PV industry did perform exceptionally well in 2022; however, the 2-wheeler (2W) industry was in dire straits, with some minor improvement in recent months. The fact that the growth was not fully symmetrical in both industries indicates a lack of uniform pent-up demand, as the severity of COVID-19's effect on different income groups was different.

The lower strata of the economy are badly affected by the aftermath of COVID-19, and inflation has eaten into their disposable income while the fuel price hike is acting as a purchase deterrent. All this has resulted in an L-shaped recovery in 2W space. 2W EV volume surged in the recent past, but it’s not good enough to prop up the 2W sales across the country, as EVs will remain in the same market perimeter as a substitute to ICE within the existing demand pool and will not alter overall demand.

The luxury PV market has not fully recovered in 2022 and missed the peak of 2018 by 10%; however, discount season was back for some slow-moving products.

Future growth path

The headwind for 2023 is already visible, as central banks around the world raise interest rates to combat unprecedented inflation caused by geopolitical conflict, supply-demand imbalance due to COVID-19 aftermath, global shipment issues, the commodity super-cycle, and so on.

The Reserve Bank of India, like the rest of the world, has recently raised interest rates by 2.25%.Now, it’s a double whammy, as inflation invisibly eats into disposable income, thus reducing the propensity to consume, and an increased interest rate makes GDP growth slow (varies drastically from country to country) and sometimes may lead to a stagflation-like situation. Increased interest rates also mean increased EMIs on loans availed to consumers, which may slow down consumption in the future as customers prioritise their needs. The impending slowdown, or in the worst case, a recession, in different countries across the world will also have an impact on India, and it can be seen in the export slowdown in recent months.

To better understand past growth trends, we put together the Indian passenger vehicle CAGR (Compound-Annual-Growth-Rate) in series, with 2002 as a common base year.

PV demand softened in December 2022, as pent-up demand was largely exhausted during the festive season. Year-end discounts were back, particularly for the entry-level segment and products with limited success. PV growth in India is closely linked to the economic performance of the country, and future growth paths will move in line with the GDP growth rate, with some lead or lag at times based on prevailing consumer sentiments.


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