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H1 2023: Passenger Vehicle Industry Analysis


  • H1 2023 registered the highest-ever half-yearly sales of 20,11,062 vehicles.

  • The average monthly volume in 2023 was 3,35,177 the highest in history.

  • Improved supply-side situation and strong demand for large PVs are the major driving factors.

Indian mass market PV industry

H1-2023 registered sales of 20,11,061 vehicles, a 10% growth over H1-2022 when the industry was reeling under a semiconductor shortage. Growth was further propelled by some exciting new launches and high-level discounts on several products.

Easing supply chain shortages have resulted in the highest ever passenger vehicle sales in H1-2023, despite several industry-specific headwinds like fuel and car price inflation, a hardening interest rate, and adverse foreign exchange movements.

Decoding growth path

To better understand past growth trends, we put together the Indian passenger vehicle CAGR (Compound-Annual-Growth-Rate) in series, with 2003 as a common base year. Growth in 2023, at its best, can be regarded as a steady state when seen in the long term. The volume lost during 2020 remained largely unrecovered.

In the post-pandemic period, growth is largely coming from mid-size and large-sized products, which are larger than 4m in length, and are taxed above the 43% GST rate. Low-end products are reeling under stress, thus carrying hefty discounts and reflecting differential purchasing power in the post pandemic economy, because not all income groups were equally and severely affected by the pandemic.

Another factor driving the mid- and large-size segment is the introduction of successful new UV products with high aspirational value from Mahindra, Hyundai-Kia, Maruti, and Toyota. These products also fall in a higher price range, thus helping automakers earn higher revenue (top line) and profit (bottom line).

Future growth path

Headwinds for the second half of 2023 include the delayed and uneven spread of the monsoon across India, as well as rising automobile prices and tightening monetary policy.

The high central bank (RBI) interest rate has somewhat restrained wholesale inflation, but it could still have an impact on future quarters' economic growth. Consumers may prioritize their requirements in the future and may reduce consumption as a result of rising interest rates and higher EMIs on loans obtained.

Discounts are back, especially in the entry-level market and for unsuccessful products. The economic performance of India is tightly correlated with PV growth, and future growth will generally follow the GDP growth rate, with occasional leads or lags depending on consumer sentiments.


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