Passenger Vehicle Sales In India Likely To Reach 5 Million Units By FY2023

The passenger vehicle market in India might have seen a slow down in the past few months but it's all set to bounce back with new emission and safety norms kicking in India next year . However, a recent ASSOCHAM-Roland Berger joint study has stated that the passenger vehicle market in India is likely to reach a sales figure of about five million units in FY 2023. In FY 2018, the sales had reached the 3.3 million units and the jump to 5 million by FY2023 will mean that the industry will see a compounded annual growth rate of 7.7 per cent. The study also noted that domestic sales of commercial vehicles in India is expected to cross one million units by FY23 from 832,000 units in FY18 thereby clocking a CAGR of 5.6 per cent.

The study also noted that there's a stronger preference for SUVs and crossover models which is expected to continue in future as well leading to a CAGR of 12 per cent in FY18-23. The report however noted that significant growth potential exists in terms of penetration of four-wheel vehicles in India which is much lower when compared to global economies such as USA and China.

The study also noted that domestic sales of commercial vehicles in India is expected to cross one million units by FY23 

The report further said that stricter enforcement of overloading ban, implementation of scrappage policy from April 2020, and GST are all expected to positively impact M&HCV market demand. Noting that growth is expected in both agricultural as well as construction machinery segment due to increasing mechanization trends, the report said that off-highway machinery domestic sales are likely to reach 870,000 units by 2022 from 749,000 in 2017 thereby clocking a CAGR of about 3 per cent.

Terming the government's intention to move from fossil fuel to clean fuel as a positive step towards positioning India at the forefront of global quest for clean mobility, the report said that the onus is not on the government alone. The auto-component suppliers need to swiftly catch up on green technology and business readiness by technology acquisitions, collaborations and capability demonstrations, it suggested adding that they should de-risk their current businesses by pivoting towards future-ready opportunities that ideally leverage their current capabilities.