Passenger vehicle ASP in India rose 50% in 5 years
In the past five years, the average selling price (ASP) of passenger vehicles in India has surged by over 50%, from Rs. 7.65 lakh in 2018-19 to Rs. 11.5 lakh in 2023-24. This increase is due to factors like premiumization, stricter regulations, and the growing popularity of sports utility vehicles (SUVs). Shashank Srivastava, Senior Executive Officer of Marketing and Sales at Maruti Suzuki India, notes a trend toward premiumization as more customers choose top-end variants with extra features.
Factors contributing to the increase in ASP
Several elements have contributed to the rise in ASP, such as higher commodity prices and changes in product mix. Srivastava explains that SUV sales have outpaced hatchbacks, leading to a structural shift and increased prices. Tata Motors also cites inflation, rising raw material costs, brand strength, and the move to higher safety and emission standards as factors influencing pricing decisions. The company aims to enhance internal efficiencies to manage rising costs before passing the remaining impact onto consumers.
Regulatory changes and real-time driving emission norms
Regulatory changes have also resulted in price increases across vehicle models. Srivastava mentions that during the transition from BS4 to BS6 in April 2020, prices rose significantly as original equipment manufacturers (OEMs) had to modify vehicles. Likewise, recent Real-Time Driving Emission (RDE) norms mandate vehicles to have an onboard self-diagnostic device to monitor emissions in real-time, requiring further adjustments and subsequent price hikes.
Luxury segment and changing consumer behavior
The luxury segment has experienced a substantial ASP increase as well, with one luxury OEM reporting an 85% jump over the last four years to Rs. 90 lakh. This is due to a focus on high-end vehicles and customers' preference for premium options. Dealers observe that people now replace their cars more frequently. New models launch regularly, enticing customers to switch vehicles every three to four years instead of the previous norm of seven to eight years or more.
