Good Infrastructure & Quality Roads multiplies Rural Car Buyers during FY24

Rural India played a pivotal role in the unprecedented surge in passenger vehicle sales during FY24, surpassing the 4-million milestone for the first time in a year. 

This growth occurred even as the popularity of hatchbacks, which have traditionally been the preferred choice for rural car buyers, experienced a decline.

In the fiscal year 2024, the number of passenger vehicles sold in India reached a total of 4.23 million, marking an 8.7% increase compared to the previous year's 3.89 million units, which was also a remarkable achievement. 

Notably, SUVs emerged as the most popular choice, with one out of every two vehicles sold in the last fiscal year belonging to this segment.  

The SUV segment experienced the highest growth rate of 28% in FY24. On the other hand, hatchbacks, including small, mini, or compact cars, accounted for 28% of the industry's overall sales, witnessing a decline of 12% from the previous year.

In FY24, rural markets witnessed record-breaking sales for major passenger vehicle original equipment manufacturers (OEMs), surpassing the urban markets where SUVs are predominantly favored.

Shashank Srivastava,executive committee member, Maruti Suzuki commented,“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."

The rise in rural sales can be attributed to various factors, as stated by Tarun Garg, the chief operating officer of Hyundai Motor India. These factors include the development of infrastructure, enhanced access to information, and the improvement in road quality.

Tarun further added,“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."

Garg reported that Hyundai's rural sales, with SUVs making up more than 60% of total sales, achieved a remarkable 19.44% in FY24, surpassing the previous year's 18%. This implies that Hyundai sold approximately one out of every five cars in rural areas, indicating a growing consumer base beyond urban centers. Tata Motors, a domestic automaker, relies on rural sales for about 40% of its overall sales. According to a company official, Tata Motors has experienced a fivefold increase in rural market growth over the past five years. "Tata Nexon, Punch, and Tiago are our top-selling products in emerging markets, and we have expanded our portfolio with offerings like Punch CNG and Tiago EV," stated a spokesperson from Tata Motors.