By Aditi Shah and Yagnoseni Das
NEW DELHI (Reuters) -Sport-utility vehicles (SUVs) made up more than half of India’s record 4 million passenger vehicle sales in fiscal year 2022-23, data showed on Thursday, signalling growing popularity of the relatively pricier vehicles in a budget-conscious market.
Automakers have sharpened their focus on producing SUVs, as consumers continue to shell out more for the feature-packed cars despite inflation trending higher through the year.
Meanwhile, the share of entry-level cars fell to less than 1% of total passenger vehicle sales as rising car prices hurt affordability for low-income buyers.
SUV sales were “much higher than expected”, Society of Indian Automobile Manufacturers (SIAM) president Vinod Aggarwal told reporters.
“SUVs are indicative of increasing income levels at the middle class and upper middle class, which is a sign of prosperity for the country,” he added.
Homegrown automaker Tata Motors Ltd and rival Hyundai Motor Co’s India unit dominate sales of SUVs – which cost at least 60% to 70% more than the lowest-priced entry level car in the country.
SUVs including Tata’s Nexon and Punch, Hyundai’s Creta and Maruti Suzuki India Ltd’s Vitara Brezza were among the top-selling cars in India in 2022.
Passenger vehicle volumes rose 27% to 3.9 million units in the year ended March 31, said SIAM, which records sales to dealers. Sales of utility vehicles stood at over 2 million.
Sales of small entry-level cars have been falling over the years and recorded a 57% decline to 252,000 during the fiscal year, from its 2016-17 peak of 583,000 units.
While new emission regulations and higher insurance costs have pushed up the price of entry-level vehicles, increasing the cost for consumers, overall global recessionary concerns have eased, Aggarwal said.
He expects the Indian auto industry to perform well in 2023-24 if the domestic economy remains strong and monsoon rains are good.
Earlier this month, the Federation of Automobile Dealers Associations (FADA), which publishes retail sales data, said growth is expected to taper to a low single-digit percentage in the current fiscal, mainly due to inflation, price hikes by carmakers and regulatory changes.
India’s annual retail inflation eased to 5.66% in March from 6.44% the previous month, government data showed on Wednesday.
(Reporting by Yagnoseni Das and Aditi Shah; Editing by Varun H K)
