The auto sector expects to maintain its growth trend in 2023
- ByStartupStory | December 19, 2022
After making a strong comeback from the COVID-led downturn this year, the Indian automobile industry is embarking on a journey with the hopes of maintaining growth momentum in 2023 and further embracing clean technology, despite the looming speed breakers of rising interest rates and cost increases due to new emission and safety norms.
While the passenger vehicle (PV) segment is expected to have record sales in 2022 despite the lingering impacts of supply chain restrictions and semiconductor shortages, the two-wheeler segment has yet to witness sustained sales growth after suffering for the majority of the year.
PV sales are expected to hit approximately 38 lakh units this year, according to industry estimates. The three-wheeler and commercial vehicle segments have also seen significant growth in 2022 compared to 2021, albeit from a low base last year, which was impacted by the second wave of COVID-19, and manufacturers will be eager to take the momentum into the new year. According to industry watchers, 2023 will also see an increase in the adoption of electric cars, which began in 2022, particularly in the two-wheeler market.
For potential passenger vehicle buyers, 2023 may not be the greatest year because vehicle prices are expected to rise next year as companies prepare to comply with higher emission standards that go into effect on April 1, 2023. Many automakers, including Maruti Suzuki, Tata Motors, and Hyundai, have already declared plans to raise prices beginning in January next year. Furthermore, rising interest rates, a bleak global economic scenario, and its potential influence on India in the next few months are some of the issues keeping the industry on the defensive.
“An increase in price always has a certain negative impact on sales. But we still do not know how much the prices will go up or what will happen to input costs and foreign exchange. These are uncertainties which will always be there,” Maruti Suzuki India Chairman R C Bhargava told PTI.
“Putting it all together, our estimate would be that next year would probably be a reasonably good year for the industry. I think we should do at least as well if not better than 2022,” Bhargava said. To meet customer demand, the country’s largest automaker will continue to introduce new vehicles, particularly more SUV models, he said.
According to the Society of Indian Automobile Manufacturers (SIAM) Director General Rajesh Menon, the passenger vehicle industry adopted the second phase of fuel efficiency regulations this year, effective April 2022, and is preparing to meet the stringent second phase of BS VI emission norms, effective April 2023.
Elaborating on the luxury car segment, Mercedes-Benz India’s outgoing Managing Director and CEO Martin Schwenk said, “We have to see how the overall economic climate is there. Overall, confidence is there that 2023 should be a good year. The world is dynamic, but at the moment, we are starting with a positive momentum into next year.” Menon stated that while a rise in loan rates can affect demand trends for all vehicle categories, the government has also increased long-term insurance premiums, which notably affect the two-wheeler market.
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