Midsize, premium cars take PV sales to record high in first half of 2022

India is likely to record its highest half-yearly passenger vehicle sales in the six months through June, despite component shortages affecting production and high inflation casting a shadow over consumer sentiment.

Industry executives and experts expect sales of cars, utility vehicles and vans to top 1.8 million units in the first six months of 2022, as the demand for personal mobility driven by the pandemic continues to remain strong.

With automakers sitting on orders for 750,000-800,000 units, they are upbeat about the rest of the year as well.


The previous high for half-yearly sales was 1.7 million units in the first half of 2018. For the first time on record, the industry also expects sales of more than 900,000 units each in two consecutive quarters. Automakers had sold 920,661 units in the January-March quarter.

"The next few months, we will continue to see this kind of high demand ... There are lots of customers who had not spent during Covid who are now making purchases," Kia India managing director Tae-Jin Park told ET.

Market leader Maruti Suzuki said it had not yet seen any impact of inflation on demand for passenger vehicles.

"The inflow of enquiries and bookings remain healthy at the moment. This quarter, industry sales should touch 900,000 units," senior executive director Shashank Srivastava said.

Maruti Suzuki has pending orders for more than 300,000 units.

Long Waiting Period
Midsize and premium vehicles are driving much of the sales, which augurs well for automakers as these offer better margins than entry-level cars. Vehicles priced over Rs 10 lakh now comprise nearly 37% of total sales, nearly three times the 16% share in 2018.

"Sales of midsize vehicles have been on a rise. It is the lower end of the market which has contracted, with entry-level buyers staying away from making purchases," said a senior executive at a leading carmaker, who did not wish to be named. Data available with consultancy firm JATO Dynamics confirm the long waiting period for midsize models, especially SUVs. It stretches to 12-40 weeks for the Tata Nexon, 24-36 weeks for the Mahindra Thar, 34-36 weeks for the Maruti Suzuki Ertiga and 28-34 weeks for the Hyundai Creta.

"The supply chain situation concerns, particularly with respect to semiconductor and other component shortages, seem to be receding ... Still the models with top demand continue to have a significant waiting period," said Ravi Bhatia, president at JATO Dynamics. This, he said, has resulted in limited incentives to buyers from dealers. The average inventory of passenger vehicles currently is around 146,000 units, as against the norm of 280,000-290,000 units. Federation of Automobile Dealers Association president Vinkesh Gulati said pending orders for passenger vehicles amounted to nearly three months of production. "Healthy bookings and single-digit cancellations show that demand may stay put even when normal supply resumes in the months to come," he said. "We are likely to have our best-ever year (for passenger vehicles)."