Domestic Demand for Cars in India is Strong and 2024 Will be Another Good Year…

That’s the outlook from leaders of the industry. Our annual ‘Best of the Year’ mega-test and subsequent awards & interviews are always enlightening. For the mega test, we assemble all the new cars and bikes launched in the past year – and it allows us to put a marker down annually to get a sense of where the industry is heading. No surprise, it’s towards EVs. Subsequentially, when we award the top-ten vehicles of the year, we sit down with leaders from the industry to get their perspective on the year gone by and the outlook for the year ahead. The consensus appears to be that, no matter what geopolitical instability the world is facing at present, India is strong, stable, and optimistic.

The CAGR of the past decade is a meagre 3.5%. With a reenergized economy post the pandemic, and a record 2022, the industry expected growth to taper off once again and resume this ten-year trendline – i.e. low single digits. But, despite a larger base, growth in 2023 is expected to follow its preceding year and end up in the high single-digits once more – closing the year at around 8.5%. With a strong economy and stable political situation (despite an election year), this level of growth is expected to continue well into 2024 – which, of course, should result in a trifecta of record numbers.

https://www.youtube.com/watch?v=ypoIOufW2yU&t=50s

But, while growth appears to be a given, the point of contention seems to be EV penetration. Maruti estimates that EVs will make up around 17-19% of the market by 2030 – well short of the government target of 30%, not to mention nowhere near some rather optimistic estimates of around 50%. The key to accelerating EV penetration is localization of battery packs and components, and the key to doing that is investment. Substantial investment!

Suzuki has already committed ₹10,000 Crore towards this, while Hyundai has pledged ₹20,000 Crore. But the fruits of their funds will take time. In the meantime, the way to mitigate emissions would be to focus on a mix of hybrids, CNG, flex-fuel, gasoline, and, of course, EVs. Strong hybrids have long been ignored as a potential stepping stone, as they are unfairly taxed at 43% along with everything else – while EV’s alone enjoy the benefit of a 5% tax rate. Clearly, it’s time to address this disparity.

Also Read: Should we be Pursuing Small & Light, Rather than Big & Electric?

But, minor disparities aside, the consensus appears to be that the India remains a bright spot in a shaky global economy – and this emerging strength doesn’t look to be derailed in 2024, or anytime in the near future.