SUV demand fuels 19% growth in Indian auto industry valuation
The Indian automobile industry has seen a significant 19% increase in value during the financial year 2023-24, reaching ₹10.22 lakh crore. This growth was primarily driven by a rise in demand for high-value vehicles, particularly SUVs, despite only a modest 10% rise in volume. The SUV segment experienced a substantial growth with a 23% rise in volume and a 16% increase in price, resulting in an overall value jump of 39%.
Factors influencing SUV demand and price increase
Several factors have contributed to the increased demand and price rise in the SUV segment. Rising input costs across the market have likely impacted SUV prices. A shift in consumer preference toward premium SUVs, hybrid and automatic transmission choices, and features like sunroofs have further amplified this trend. The growing popularity of these features, often linked with higher-value vehicles, has added to the perceived value proposition of SUVs.
India's unique position and preference for high-value vehicles
The budding electric vehicle (EV) market within the SUV segment, also played a role in the industry's growth. "India is bypassing lower-priced products and focusing on feature-rich, higher-priced vehicles," stated Anurag Singh, Managing Director of Primus Partners. He emphasized that SUVs are now the preferred choice for a majority of Indian car buyers. This trend contrasts with the passenger vehicle (PV) category, which saw a 9% volume decline and a 4% value drop.
Two-wheeler segment also sees growth
The two-wheeler segment in India also experienced growth with a 10% rise in volume, and a 13% increase in value. India's strong position as a global automotive player was highlighted by the report. While India is third in terms of vehicle registrations behind China and the US, its value growth outpaces volume growth, which indicates a shift toward higher-value vehicles. Interestingly, the average price of a car in India, remains lower than in many developed countries.
