Consumers moved away from diesel vehicles in 2023; EV, hybrid sales rise

SUVs, on the other hand, are likely to grow up to 54-55 per cent from a current level of 48.7 per cent. It has already grown from 42 per cent in 2022 to nearly 49 per cent in 2023

Consumers moved away from diesel vehicles and headed towards hybrid cars and electric vehicles (EVs) during 2023.

The passenger vehicle (PV) industry is likely to see a churn in the powertrain mix during the coming years even as sports utility vehicle (SUV) sales continue in top gear.

According to Shashank Srivastava, senior executive officer, marketing & sales, Maruti Suzuki India (MSIL), the share of diesel vehicles in the overall PV segment came down from 19.2 per cent in 2022 to 17.6 per cent in 2023.

This came as the share of hybrid vehicles went up from 0.5 per cent to 2 per cent during the same period.

Electric vehicles, too, saw an increase in share from 1.3 per cent to 2.2 per cent.

Interestingly, the share of CNG vehicles has also risen and automotive original equipment manufacturers (OEMs) feel this is a good fuel option, especially for entry-level cars.

For example, Tarun Garg, chief operating officer (COO), Hyundai Motor India (HMIL), said that it is doing around 6,000 CNG vehicles a month. In models like Aura and Exter, this fuel option has a high share already. Garg felt that it is difficult to predict the future of diesel vehicles (HMIL now has diesel options for SUVs). However, going forward, it feels that EVs will constitute 20-22 per cent of the overall PV volumes by 2030.

HMIL sold 1,100 units of its Ioniq EV against the internal target of 500 during the year.

Shailesh Chandra, managing director (MD), Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said:

“Sales of our emission-friendly products in the EV segment and innovative twin-cylinder CNG range, also recorded steep growth during Q3 FY24. EV sales posted a healthy growth of 21 per cent versus Q3 FY23 (domestic + IB), led by the launch of the new Nexon EV and continuing popularity of the Tiago EV. The four products in the CNG segment cumulatively registered a substantial 214 per cent growth compared to Q3 FY23.”

Srivastava pointed out that consumers are going for hybrids because of multiple factors – cost of acquisition of EVs is high and they are not confident of the ecosystem of charging infrastructure. While they were rooting for diesel as a fuel efficient option earlier, now changing regulations have brought in a change of mind.

Garg felt that taxation structure on hybrids will play a crucial role – at present it is 5 per cent for EVs, and 43 per cent for hybrids. He feels that 2025 onwards will be an inflection point for EVs, and their share in the overall PV segment will rise.

SUVs, on the other hand, are likely to grow to 54-55 per cent from the current level of 48.7 per cent. It has already grown from 42 per cent in 2022 to nearly 49 per cent in 2023.

Srivastava feels that after hitting the 54-55 per cent mark, SUVs will see a plateauing of demand. In contrast, if income levels rise, then hatchbacks (smaller cars) may see some stability in demand with growing affordability.