Passenger car sales pick up

Passenger car sales increased by an impressive 17.3 percent in 2022-23. This was its second consecutive year of rise. In 2021-22, sales had increased marginally, by 2 percent. The 2022-23 increase in sale of passenger cars is reflected across all its segments. Sales of compact cars, mid-size cars and mini cars increased by 18.6, 15.2 and 7.2 percent, respectively. Compact car and mid-size car segments have powered the growth in passenger car sales.

In the last two years, passenger car sales have increased cumulatively by 19.6 percent. Yet, passenger car sales have not recovered from the 34.4 percent contraction suffered between 2017-18 and 2020-21. Passenger car sales of 2022-23, are still 21.5 percent lower than 2017-18 sales.

Passenger cars are a part of a broader category of automobiles these are passenger vehicles, which includes multi-utility vehicles. While passenger car sales have increased well, multi-utility vehicles sales have done even better. Here, we focus on the passenger cars segment.

A large part of the growth in passenger car sales in 2022-23 was registered in the first four months of the year. Passenger car sales increased by 25.8 percent between April and July 2022. Growth dissipated in the following months. Sales dipped by 8.5 percent in August 2022 and the fall was not recovered despite an increase of 6.1 percent in September 2022. Sales fell again between October and December 2022, by 14.6 percent. While in January 2023, sales of passenger car increased by 13.1 percent, this increase was not sustained. Sales fell in February and March 2023.

The increase in sale of passenger cars is reflected across all its segments. Compact car sales grew by a handsome 18.6 percent in 2022-23. This is the second consecutive rise in sale of compact cars. In 2021-22, compact car sales grew marginally by 0.7 percent. Around 1.6 million compact cars were sold in 2022-23. Swift was the largest selling compact car during the year. About 0.22 million Swift cars were sold in 2022-23.

Compact car sales had peaked in 2018-19, when 1.9 million units were sold. Sales in 2022-23, were still 16.3 percent lower than this record.

Sale of mid-size cars increased in 2022-23, by 15.2 percent. This is the second consecutive year of a rise. In 2021-22, mid-size car sales increased by 20.8 percent. These increases comes on the back of three consecutive falls. Between 2017-18 and 2020-21, mid-size car sales contracted by 45.5 percent. This contraction in sales has not been recovered in 2022-23. Sales of 2022-23, is still 24.2 percent lower than in 2017-18.

Sale of mini cars increased by 7.2 percent in 2022-23. This is the first time that sale of mini cars has increased since 2016-17. Between 2016-17 and 2021-22 mini car sales plunged by a striking 52.3 percent. This contraction in sales has still not been recovered. In 2022-23, 0.3 million mini cars were sold, this is 51.1 percent lower than 2016-17 mini car sales.

Although, sales in all segments of passenger cars have increased, it is the compact cars and mid-size car sales that have pulled up passenger car sales in 2022-23. While compact car and mid sized car sales have grown significantly, mini car sales have grown at a slower pace. The growth in sales of mini car is less than half the growth in mid sized and compact car sales.

The share of compact cars in total passenger car sales increased. In 2022-23, compact cars accounted for 74 percent of passenger car sales. In 2021-22, 73.2 percent of the total passenger cars sold were compact cars.

The two-year double-digit growth run of passenger cars does not necessarily imply continued robust growth in sales. Sales momentum petered out after July 2022 and recent months have seen volatility in the monthly sales series. It is likely that passenger car sales growth will moderate to mid-single digits in 2023-24.