Robust rural growth, strong demand for SUVs drive car sales in FY24

Indian carmakers reached a new high in 2023-24 (FY24) with sales of 4.23 million domestic passenger vehicles (PVs), marking an 8.74 per cent year-on-year (Y-o-Y) increase. This was driven by strong demand for sports utility vehicles (SUVs), robust rural sales, and high gross domestic product (GDP) growth.

Shashank Srivastava, executive committee member of Maruti Suzuki India (MSIL), told reporters that the SUV segment saw 

28 per cent volume growth in FY24.
 

On the other hand, the sales of hatchbacks and sedans declined by 12 per cent and 6 per cent, respectively, during the same period.
 

The SUV segment’s market share in the total Indian PV market grew from 40.1 per cent in FY22 to 43 per cent in FY23, and further surged to 50.4 per cent in FY24. “This share is expected to reach around 54-55 per cent by the end of FY25,” Srivastava said. MSIL leads in the SUV segment.

 

Srivastava said 11 per cent growth in FY24 rural sales was much higher than the urban sales growth of 7 per cent. “Rising income levels in rural areas, substantial government investments in public infrastructure like roads, and favourable monsoon were the driving forces behind the robust growth in rural sales,” he explained.
 

He said the average salary ratio between urban and rural areas currently stood at 1.8. “This is expected to decrease to 1.4 in the upcoming years, further stimulating rural growth,” he said. MSIL’s domestic PV sales reached 1.759 million units in FY24, a 9.52 per cent Y-o-Y increase.
 

In FY24, approximately 99,000 electric cars and 89,500 hybrid cars were sold in India. “However, in the past six months of FY24, sales of hybrid cars were higher than the electric cars,” Srivastava said, indicating single-digit volume sales growth for the auto industry in FY25.
 

Like MSIL, Hyundai Motor India (HMIL) registered its highest domestic sales in FY24 at 614,721 units with 8.31 per cent Y-o-Y growth. This was driven by strong demand for its products, mainly in the SUV segment.
 

Tarun Garg, chief operating officer (COO) of HMIL, said: “SUV penetration was the highest ever of 63 per cent, up from 53 per cent the previous year...These are HMIL’s highest sales figures to date. In FY24, we introduced several new models and product upgrades, including the Exter, new Creta, new i-20, and the introduction of ADAS (advanced driver-assistance systems) in the Hyundai Venue and Venue N Line.”
 

The company expects its Talegaon plant to become operational by the second half of 2025. “The past two years were stellar for the auto industry. In FY25, the industry expects the growth to moderate to low single digits of 2.5-3 per cent due to a higher base,” Garg said.
 

He said the industry was expected to grow further in rural areas. “In FY24, Hyundai’s rural market penetration was 19.44 per cent, compared to 18.46 per cent the previous year. Over the past three months, it has been around 20 per cent,” Garg said, citing improved infrastructure, increased information flow, and growing demand for SUVs as the reasons.