Car sales in India set to hit record 3.8 million units in 2022

India‘s automakers are projected to end this calendar year with sales of 3.8 million passenger vehicles (PVs), exceeding the previous record by more than 400,000 vehicles, driven by sustained demand and improved component supplies that helped them step up production.

With Indians shopping for cars and sports utility vehicles like never before, PV sales this year are set to increase by nearly a fourth – the fastest growth among major global economies – compared with 2021. Sales in the first 11 months of this year have already topped the previous annual record of 3.39 million units set in 2018. The estimated sales growth for this year is 23%, which comes on top of a 27% expansion in 2021.

Wholesale numbers for passenger vehicles crossed the 300,000-mark for the sixth straight month this year in November, taking the cumulative tally to more than 2 million units for the first time in a six-month period.

milestone

Launches and Offers

Demand is so strong that the challenge before the industry is to align production with that, Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki, said recently. His company, India’s largest carmaker, is witnessing healthy order inflows, he had said.

In December, wholesale volume in the segment is expected to increase 6% to 276,000 passenger vehicles.

While dispatches this month will be lower than the average seen the last few months, senior industry executives expect retail numbers to remain strong due to automakers doling out promotional offers on slow-moving models towards the end of the year .

“The industry has added volumes of over 700,000 units in the last one year. This is massive if you compare with the growth rates being seen in other major auto markets globally,” said a senior industry executive, speaking on the condition of anonymity.

On the other hand, according to Srivastava, inflation and increasing interest rates could weigh on demand in the coming months. “We have to closely monitor the demand situation going ahead,” he cautioned.

Sales of passenger vehicles had fallen to 2.43 million units in 2020 amid the disruptions caused by the pandemic. Demand has since recovered sharply, outpacing supplies and stretching the waiting period for customers. A global shortage of semiconductors, a key component in modern vehicles, added on to the woes and affected automobile production last year.

While the supply side is improving, a slew of launches has kept the consumer interest strong.

Given the buoyant demand in the market, major automakers are putting in place measures to increase their production capacity, which is expected to entail an investment of around Rs 30,000 crore over the next couple of years.

Maruti Suzuki, for one, has commenced work to set up a new manufacturing facility in Haryana with an initial investment of Rs 11,000 crore. Homegrown auto major Mahindra & Mahindra has said it would increase production capacity to 49,000 units per month by the end of the next financial year, from 29,000 units in FY22.

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