Rural India drives passenger vehicle sales record in FY24
- Demand for hatchbacks, which dominated rural car purchases in the past, continues to slide
Rural India emerged as the driving force behind the record-breaking sales of passenger vehicles in FY24, which crossed the 4-million-mark for the first time in a year, despite the demand for hatchbacks that have typically dominated car purchases in the countryside continuing to slide.
In FY24, a total 4.23 million passenger vehicles were sold in India, rising 8.7% from 3.89 million units the previous year, which was also a record. One in every two of these vehicles sold last fiscal year was a sports utility vehicle, or an SUV, a segment that saw the sharpest growth of 28% in FY24, while sales of hatchbacks, or small, mini or compact cars, accounted for 28% of the industry’s total sales, declining 12% from the year before.
Major passenger vehicle original equipment manufacturers (OEMs) saw all-time-high sales in their rural markets in FY24, overtaking urban markets where SUVs are highly preferred.
“Rural sales of 7.87 lakh units this year, a growth of 11% year-on-year, have been much better than urban growth. Rural growth for the year is about 11% and urban growth is about 7%. And so, this is the highest-ever rural sales that we saw, which also should be a very good signal for the economy,” Shashank Srivastava, executive committee member, Maruti Suzuki, said.
Tarun Garg, chief operating officer, Hyundai Motor India, attributed the surge in rural sales to multiple factors such as infrastructure development, increased access to information, and improved road quality.
“In rural India, we currently have 562 touchpoints out of our total of 1,363 sales points. This accounts for approximately 40% of our dealership network,” he said.
Garg said that rural sales for Hyundai, for which SUVs account for over 60% of its total sales, reached a record 19.44% in FY24, up from the previous year’s 18%. This means that it sold nearly one in every five cars in the rural areas, signifying a burgeoning consumer base beyond urban centres. For homegrown automaker Tata Motors, rural sales contribute around 40% to the company’s overall sales. In the past five years, Tata Motors has seen a fivefold increase in rural market growth, a company official told Mint. “Tata Nexon, Punch, and Tiago are our highest-selling products in emerging markets, with notable portfolio expansions like Punch CNG and Tiago EV”, a Tata Motors spokesperson said.
The exponential growth in rural sales isn’t an isolated phenomenon, but a culmination of various factors fostering economic buoyancy in the countryside, Srivastava elaborated.
“There seems to be a convergence in the segment choices of the rural and the urban consumers with a small lag of time.”
Earlier, rural markets mostly preferred small cars at the entry level, but over the years that seems to have changed with aspirations of rural consumers also rising. To be sure, the percentage sales of smaller cars is higher in rural areas still, but the overall segment construct of the markets is converging. Rising rural incomes, higher internet penetration and connectivity are leading this change, Srivastava said.
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Business NewsAuto NewsRural India drives passenger vehicle sales record in FY24
First Published:1 Apr 2024, 09:25 PM IST
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