Hot wheels drive auto sales but infra continues to limp
Sales of passenger vehicles (PVs)—which cover cars and utility vehicles, including SUVs and vans—grew at a healthy 9% for the April-June quarter, with the number of units shipped up to 9.96 lakh from the comparative previous quarter of 2022. Dissecting the numbers, it appears that utility vehicles—the signal of a new lifestyle—are driving the auto market. UVs like Tata Nexon and the Hyundai Creta sold 5.47 lakh units—a tremendous 18% growth and accounting for 55% of the overall car market. Industry leader Maruti
Suzuki’s net profit more than doubled by 145% to Rs 2,485 cr for the first quarter of FY24, compared to Rs 1,029 cr in the same quarter last year. The robust performance was not so much because of its sedans and hatchbacks, whose numbers declined, but on the back of the 56% growth in the UV segment which clocked 1.26 lakh units.
India’s uber consumer’s love affair with the SUV is not an isolated streak. It’s a new way the rich and the upper middle class look at the good life. It is the willingness to splurge on luxury, provided it has the correct flash and sparkle. Sales of single malt whiskeys, premium smartphones and TVs are shooting through the roof. As many as 36 models of SUVs have been launched in the last five years, but sales of cars priced under Rs 10 lakh are falling. This is not to say it is all style. Consumers realise SUVs can take our rough and half-built roads better.
India produced over 2.5 million passenger vehicles last financial year, and by 2030 our auto market is expected to become the world’s third-largest. The newer models are bigger and heavier, but can our infrastructure sustain this explosive growth? Urban India, especially the non-metro cities and towns, is a maze of unplanned lanes with no scope for expansion. Over 40% of our roads are unsurfaced and can only be used in fair weather. Internal city roads are poorly constructed and, in the monsoon, turn into a minefield of potholes.
The demand for electric vehicles (EVs) is booming, but a lack of charging and battery-swapping stations is proving to be a constraint. Compared to an estimated requirement of 50,000 public charging stations, we have just 5,200. It is, therefore,time to turn the focus away from hot wheels to improving our transport infrastructure.