Sales analysis: How was the Indian passenger car market in Q1 2024

Better-than-expected demand for the strong-hybrid Innova and Hyryder ensured phenomenal growth for Toyota in this quarter.

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Q1 2024 : Analysis of the Indian passenger car market

The Indian passenger car market grew by 11.6% in Q1 2024 to post wholesale of 11,35,482 units, which is the highest ever Q1 sales in a given calendar year (CY). To meet the retail target after huge wholesale volume, manufacturers and dealers are also doling out discounts, except for a few very successful products in the Indian market.

With the COVID-19-induced commodity super-cycle subsiding in 2024, prices of major input raw materials have cooled for the automotive industry.

What came as a major relief for manufacturers was normalising the prices of precious metals (palladium and rhodium) used in catalytic converters, for which demand has gone up in the stricter BS-6 emission compliance phase since April 2020.

Now it is on the manufacturer to either make profits from lower costs or pass on this benefit back to customers in the form of price cuts or increased discounts to sustain retail sales in the coming quarters. Demand-supply forces will establish a new equilibrium in the coming future.

Consumer advice: It’s going to be mostly a buyers’ market in 2024, so haggle hard!

Q1 2024 : Brand wise growth

Volume and market share growth matrix

Both of these parameters are captured in the two dimensions of the above graph, which gives a clear picture of overall performance.

High Volume Growth - High market share gain

• Toyota: Better-than-expected demand for the strong-hybrid Innova and Hyryder ensured phenomenal growth for Toyota in Q1 2024. Cross-badge Maruti products have maintained steady momentum for Toyota’s overall sales in India.
• Mahindra: With the new capacity going full-stream, Mahindra again posted great figures. Scorpio N and Thar were real growth and profit drivers in this quarter. XUV 700 sales were stable, but the entry of the facelifted Tata Harrier and Safari pushed the XUV 700 marketing budget higher in Q1 2024. With the upcoming Thar 4-door version and the XUV 300 with a panoramic sunroof, Mahindra too has become a strong contender for the #2 position in India!

Moderate Growth - Marginal market share gain

• Maruti: The strong comeback of Ertiga and the addition of Fronx helped Maruti match industry growth figures. However, the entire product line-up was available at huge discounts.
• Tata: Punch's EV and dual-tank CNG versions were a real growth driver for Tata in Q1 2024, in addition to slightly better sales of the refreshed Harrier and Safari. With Curvv joining Tata’s portfolio by Q4 2024, Tata may end up being the #2 car maker by year-end. However, sales of other Tata EVs were downright flat.

Volume Growth – Market share loss

• Hyundai: Exter brought growth for Hyundai in Q1 2024; however, cannibalization of the i10 resulted in overall slow sales growth.
• Honda: Honda's sedan sales were in decline, and growth came from sales of the Honda Elevate. However, after an initial shopping spree by Honda loyalists, Honda was struggling to maintain 4,000+ sales of Elevate and had to offer discounts in Q1 2024. Elevate seems to be well-priced for what it offers but doesn’t have a true top-end with segment benchmark features. Lack of a drivetrain option also limits appeal.
• Nissan: The introduction of AMT transmission for 1L naturally aspirated engines has marginally improved sales for the lone product, Magnite, in Q1 2024.

Volume De-growth - Market share loss

• Kia: 24% and 18% drops in wholesale of Carens and Seltos, respectively, reflected in an overall 1.6% market share loss for Kia in India. Seltos supply-side move was meant to avoid discounting on MY24 stocks in the wake of the launch of the Creta facelift.
• MG: To boost sales MG has gone for a price cut across its product line and has had much higher marketing spend to promote the sticker price of its entire portfolio. That underscores how badly MG needs generational change for its entire product portfolio in India.
• Renault: Poor product life-cycle management resulted in a free fall in sales of the entire product line in Q1 2024.
• Volkswagen: With huge discounts riding on the entire portfolio, sales were mostly stable, with better volumes coming from Virtus.
• Skoda: Skoda's sales were in free fall in the first quarter of 2024.
• Citroen: The biggest news for Citroen in this quarter was a 0 star being awarded to the eC3 by GNCAP after a crash test. It simply unveiled the low-cost product strategy PSA has adopted for the Indian market. The biggest relief, however, is the bulk deal closed by Citroen with Blue Smart (an EV fleet operator) for the supply of 4,000 eC3 as part of a long-term contract. The future is still uncertain as the new crossover product Basalt showcased recently didn’t have a sunroof either. This is when conservative Maruti is trying to put a single-pane sunroof on the Dzire (sub-4m sedan) to lure customers. What a shame, Citroen India!
• Jeep: The iconic American brand was not able to touch the 400-unit average mark in 2024, when its self-set target by its MD was 1,000 units!
• BYD: Compared to its Chinese compatriot SAIC (wearing an MG mask), BYD has quite well-built cars in the form of the Atto 3 and Seal. However, having mediocre management and employees in India ensures that it remains grounded for the best part of the year.

Body style snapshot

• UV continues to be in high demand in the form of SUVs, crossovers, and MUVs. As a result, hatchback market share was reduced to a mere 26%.
• The sedan segment was largely stable due to higher sales of sub-4m sedans with CNG drivetrains in the fleet segment.

• Brands with exposure in the hatchback and sedan segments are struggling for growth in a growing Indian passenger car market.

• Maruti continues to be the leader across multiple segments due to its largest product portfolio spread across the low- and mid-price spectrum.
• Mahindra has differentiated standing with an old-school ladder-frame-based chassis and rugged and abuse-friendly products with some real-time off-road ability, as true SUVs were regarded in the past.

Q1 2024 : Best-selling Products

• Big surprise: The Tata Punch became the best-selling car in Q1-2024. Petrol version sales have been intact; growth largely came from the EV version that became the best-selling EV in India, and nearly 33% of sales now come from the innovative dual-CNG-tank version.
• Mahindra gained a foothold in the top 10 rankings with the phenomenal success of Scorpio-N, which was able to win customers from urban regions besides being strong in rural and semi-urban regions.
• Maruti now has only six products in the top 10 rankings. All these products were having some discounts, except for Ertiga and Brezza AT. Despite being in the last phase of the product-life-cycle and a new generation lurking around the corner, Swift and Dzire are still posting good numbers.
• The Hyundai Creta facelift has adversely impacted competition, as always in its segment. Because all-rounder Creta simply got better with clean design language than previously polarising one.

• Maruti Alto, the cheapest car in India, held the #1 position for 15 years until 2019 and has now dropped to #14 in 2024. The product still offers good value in its 3rd generation. Reason could be, either Indian customers moved on to a higher segment (Wagon R > Swift > Baleno) or in post COVID world target customers don’t have enough money to afford entry-level cars in India as of now.
• The market size of the Toyota Innova here represents the dichotomy of the Indian market, punching holes in the assumptions made for Maruti Alto's sales fall, above.
• The presence of six products in the outer boundaries of sub-4m circle of the 20-best-selling cars only corroborates the fact that Indian customers are highly value-conscious, and a low-cost solution approach is not going to succeed in India. Tata Nano should serve as the biggest reminder for every manufacturer planning products for India.

Here's what BHPian PrasannaDhana had to say about the matter:

No surprise Punch got to the 1st spot. It caters to the first-time buyer who earlier bought the Alto.

It's a bigger, more comfortable, safer Alto basically. Micro SUV looks, GC are an advantage, while after-sales service is a minus.

Here's what BHPian Sensible_Speed had to say about the matter:

The Alto's segment fell prey to tightening regulations. To maintain margins, Maruti had no choice but to jack the price up to the point where the value proposition of the Alto vanished. If Maruti can restructure their profitability to allow the Alto prices to drop by about 80,000 INR, they just might have a chance to revive the segment. This problem plagues every Maruti model south of the Swift. The Wagon-R is an outlier, being an older-generation model. Celerio and Alto, which were once the most popular Marutis, have now been relegated by their pricing.

Here's what BHPian shortbread had to say about the matter:

Tata needs to liven up the Altroz with a proper facelift launch. In my opinion, the most beautiful Indian automotive design. In a popular segment, Altroz has been plagued by piecemeal launches, diesel, then a year later turbo petrol, then another year for a proper automatic. A proper refresh and I think Tata can double Altroz volumes.

Check out BHPian comments for more insights and information.