Automakers Bullish as Domestic Sales Eye 4.2 Million Units by FY24

The Indian automobile industry is shifting into high gear, with carmakers expressing optimism about domestic sales reaching a staggering 4.2 million units in the ongoing financial year (FY24). This projected figure signifies a significant jump from the previous year and paints a rosy picture for the sector.

Experts predict that car sales in India will reach a record 4.2 million in FY24, with an estimated 3,75,000 passenger cars projected to be sold in March, the last month of the current fiscal year. Compared to the 3.89 million cars sold in FY23, that would represent an 8% rise.

Industry data shows that as of February, automakers had dispatched 3.86 million cars, SUVs, and sedans to dealership locations, an increase of 8.6% over the 3.55 million units they shipped during the same period last year.

Maruti Suzuki, Hyundai Motor India, Tata Motors, and Mahindra & Mahindra are among the automakers whose car sales are rising as a result of better semiconductor supply, strong demand for sport utility vehicles, recent strong economic development, a good monsoon, and successful monetary policies.

“The projections for PV sales at the beginning of the year had three uncertainties built-in: supply-side constraints due to the semiconductor crisis, the negative effect of El Niño on the monsoon, and the stickiness of inflation resulting in higher bank rates and the consequential increase in auto loan rates,” said Shashank Srivastava, senior executive officer (marketing and sales)

Factors Fueling the Growth

• Pent-up Demand: The COVID-19 pandemic led to supply chain disruptions and a reluctance to make big-ticket purchases. With the situation improving, there’s a surge in pent-up demand for new cars, especially from those who postponed purchases in the past year or two.
• Festive Season Boost: The upcoming festive season in India, typically marked by increased spending, is expected to propel car sales further. Manufacturers often introduce new models and launch attractive deals during this period, further enticing potential buyers.
• Economic Revival: A gradual economic recovery is putting more money in people’s pockets, leading to increased consumer confidence and a willingness to invest in durable goods like cars.
• New Car Launches: Automakers are launching a plethora of new models across various segments, catering to a wider range of customer preferences and budgets. This wider variety entices potential buyers and keeps the market fresh and exciting.
• Improved Availability: The global chip shortage that plagued the industry seems to be easing, with supplies gradually improving. This allows manufacturers to ramp up production and meet the rising demand for new cars.

Conclusion

The Indian car market is poised for a record-breaking year, fueled by pent-up demand, economic revival, and a slew of new car launches. This growth presents exciting opportunities for carmakers and allied industries. However, navigating rising input costs, potential interest rate hikes, and fuel price volatility will be crucial for sustained growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.