car sales: passenger vehicle sales in 2022 expected to beat record estimates

Passenger vehicle sales in India this year are expected to be around a quarter of a million units higher than initial projections which were themselves for record volumes, industry executives have said.

The industry is optimistic about improved component supply helping automakers ramp up production and clearing backlogs faster, and new bookings continuing to be strong ahead of the holiday season despite a high inflation and rising interest rates.

Sales of cars, commercial vehicles and vans in calendar year 2022 are now expected to be 3.6-3.7 million units, 17-20% higher than last year’s sales .

“It will be the best year ever for car sales,” said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations, who added that customer demand was always higher than supply. “Every month, whatever we sell, we get 5-10% more bookings, which adds to the backlog,” he said. The industry had its best year so far in 2018, with sales of 3.39 million units. These are factory shipments and not retail sales, which Indian automakers typically do not report.

New models attract interest

Gulati also expects retail sales to be strong this year, as he expects dealerships to return at least 3.6 million passenger vehicles to their customers. The strong demand environment is also expected to boost factory shipments in the fiscal year ending March 31, 2023 to exceed the projection of 3.5 to 3.7 million units.

Sales of passenger vehicles had been hit hard at the start of the pandemic and fell to 2.43 million units in 2020. Demand has since recovered sharply, outpacing supplies and lengthening the waiting period for vehicles. customers, which has led automakers to secure multiple sources of parts. A global shortage of semiconductors, a key component of modern vehicles, has added to the woes, disrupting operations for most of the last year and a half. Sales were 3.08 million units in 2021.

As the supply improves, a host of new launches –

‘s Brezza and Grand Vitara; Hyundai Coming and Tucson; the Tata Punch and the XUV700 and Scorpio from Mahindra & Mahindra – maintains consumer interest. The industry is currently sitting on 700,000 to 750,000 pending bookings.

“Based on wholesale shipments, inquiries and pending reservations, demand metrics remain strong,” said Shashank Srivastava, senior executive director of market leader Maruti Suzuki.

The company has an order book of 335,000 units. No less than a third of this comes from the newly launched Brezza and the Grand

which have accumulated more than 100,000 bookings in recent weeks.

With supply bottlenecks easing, Maruti Suzuki increased production from a year earlier as well as the previous month by 15% in July. Srivastava said: “Production has not been able to keep pace with demand over the last 12 to 18 months. The supply situation is much better now, although it is unlikely to it completely normalizes during this trimester.”

Inventory in the channel last month rose to 212,000 units – the healthiest since August 2021. While backlogs are high, a big challenge for automakers now would be to ensure production by model conforms to the request template. Otherwise, retail will lag behind wholesale numbers, Srivastava said.

Hardeep Singh Brar, vice president and head (marketing and sales) of Kia India, said supply chain issues were now showing signs of easing and market sentiment remained bullish. The strong order pipeline, dealer replenishment and resilient consumer demand will drive industry growth in the coming months, said Ravi Bhatia, president of consultancy Jato Dynamics.