The country's passenger vehicle market, valued at Rs 4.5 lakh crore, achieved a new milestone, after annual volumes of cars in 2023 crossed the four million mark for first time ever. The vehicle segments, as per Society of Indian Automobile Manufacturers (SIAM), that witnessed a spurt in sales, include sedans and utility vehicles.  

The car sales numbers revealed by SIAM, in its recent report, has also highlighted that around 4.1 million passenger vehicles were sold in the domestic market during the last calendar year, recording an increase of around 8.2 per cent, compared to sales of 3.79 million units in 2022, as per industry estimates. 

What’s caused this rise? 

While COVID-19 has negatively impacted the passenger vehicle segment across the world, India became the fastest-growing automobile market for a key reason- semiconductor chips.

These are important components for cars, which went scarce due to the pandemic disrupting supply chains. After the pandemic effect started waning, there was a big scramble for those chips, however, India produced cars faster than other major markets because its cars have fewer chips, the report said.

The key factor behind the record car sales in the last calendar year is the positive macro factors in one of the world’s fastest-growing major economies. 

Higher disposable incomes, rise of the middle class, adequate development of roads and highways, a propensity to travel more, and the pent-up demand from the pandemic have been bolstering India’s car market. 

The country's burgeoning craze for Sports Utility Vehicles (SUVs) and a wider adoption of electric vehicles have spearheaded the record sales last year, it said. 

“The Passenger Vehicle industry is expected to (have) posted its highest ever sales in the calendar year 2023 (CY23), crossing the significant 4 million mark, supported by a strong supply situation, new nameplates launched in the SUV segment, and a robust demand during the longer festive period," said Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, citing media reports. 

"Coming off a high base, the industry recorded a single-digit growth overall with the key highlight of this moderate rise being the sharp growth registered in emission-friendly product categories. Both EV and CNG segments posted growth greater than 90 per cent and 25 per cent respectively, signaling a growing preference for green and smart technologies by Indian,” the report added.