Uttar Pradesh is India's No. 1 state for vehicle sales: Maharashtra leads on car front

 

Introduction

The Indian automotive industry has been growing at a healthy pace over the last decade, thanks to rising incomes, increasing urbanization, infrastructure development, and introduction of new models. With vehicle penetration still quite low compared to other major markets, the growth potential remains immense.

Within the overall national sales figures, there is an interesting trend that has emerged - Uttar Pradesh has emerged as the No. 1 state in India for overall vehicle sales, while Maharashtra leads in car sales specifically.

In this article, we take a closer look at the vehicle sales dynamics across different states, what's driving Uttar Pradesh to the top position, and how Maharashtra manages to lead car sales despite UP's massive volumes.

Vehicle sales overview in India

The Indian automobile market can be broadly classified into three segments - two-wheelers, passenger vehicles or cars, and commercial vehicles. Let's look at a quick overview of each of these:

Two-wheelers

• Two-wheelers like motorcycles and scooters make up the bulk of vehicle sales in India, accounting for over 75% of the market.
• Key players are Hero MotoCorp, Honda, Bajaj Auto, TVS Motors, Royal Enfield etc.
• The highest selling two-wheeler models are Hero Splendor, Hero HF Deluxe, Honda Activa, Bajaj Pulsar etc.
• Monthly sales average around 15-18 lakh units nationally.

Cars

• Passenger vehicle or car sales account for 12-15% of the total vehicle market.
• Top car brands are Maruti Suzuki, Hyundai, Tata Motors, Mahindra etc.
• Highest selling car models are Maruti Alto, Swift, Baleno, Vitara Brezza, Hyundai Creta, Venue, i10 etc.
• Monthly car sales range between 2-2.5 lakh units on average.

Commercial vehicles

• Trucks, buses etc comprise the rest of the vehicle market.
• Key CV manufacturers are Tata Motors, Mahindra & Mahindra, Ashok Leyland.
• Monthly sales around 45,000-55,000 units.

 Uttar Pradesh leading vehicle sales

Coming to sales breakup across states, Uttar Pradesh has emerged as the leading state for overall vehicle sales in India. Let's examine what's driving this:

Factors driving growth

• With a population of 230 million, UP offers a massive addressable market.
• The state economy has been growing at a healthy rate, driving up incomes and consumption.
• Investments in roads, highways, infrastructure have improved connectivity.
• More two-wheeler and CV sales driven by demand from rural and semi-urban areas.
• OEMs have a strong distribution and sales network to tap demand.

 Segment-wise performance

• UP accounts for over 18% of total two-wheeler sales in India, selling around 3.2 lakh two-wheelers per month.
• It also leads in motorcycle sales, thanks to Hero MotoCorp's strong presence.
• In passenger vehicles, UP has monthly sales of around 48,000 units, second after Maharashtra.
• The state leads in commercial vehicle sales as well, driven by demand from infrastructure and mining sectors.
• So a combination of massive two-wheeler and decent car & CV volumes puts UP in the pole position overall.

Maharashtra leading car sales

Despite UP's strong overall vehicle sales, Maharashtra emerges as the top state for car or passenger vehicle sales specifically. Here's why:

Mumbai factor

• Presence of the financial capital Mumbai, with high disposable incomes and car penetration.
• Mumbai alone accounts for over 30% of Maharashtra's car sales.

 Car manufacturers presence

• Maharashtra has a strong ecosystem of OEMs like Mahindra, Mercedes Benz India, Skoda, Volkswagen etc.
• Dealerships and marketing activities centered around Mumbai help generate sales.
• On average Maharashtra sells around 65,000-70,000 cars per month.

Other major states

Apart from UP and Maharashtra, some other states with significant vehicle sales are:

Tamil Nadu

• A major automotive production hub with plants of Ford, Hyundai, BMW etc.
• Strong two-wheeler demand from rural markets drive overall sales.
• Chennai urban market aids passenger vehicle sales as well.

Gujarat

• Auto manufacturing hub with presence of Maruti Suzuki, Tata Motors.
• Healthy industrial growth and infrastructure spending driving CV demand.
• Car sales also picking up in cities like Ahmedabad.

Karnataka

• Technology and auto hub with manufacturing plants of Toyota, Volvo, Scania etc.
• Metro cities like Bangalore generate significant car sales.

Future outlook and challenges

Going forward, vehicle demand across states is expected to be driven by:

Infrastructure boost

• Government's push towards highways, road infrastructure will unlock demand.
• Metro rail networks planned in major cities will aid urban mobility.

Increasing affordability

• More disposable incomes and easy finance options will drive aspirational buying.
• Continued model launches by brands across segments will help attract customers.

Policy support

• Favorable policies like lower GST on EVs will propel growth.
• Scrappage policy can help replacement demand.

However, OEMs need to keep a tab on:

• Commoditization risk across entry segments.
• Impact of slowdowns/disruptions on buying.
• Maintaining competitiveness on pricing along with quality.

Conclusion

The vehicle sales dynamics across states provide some interesting insights into market opportunities and strengths of different regions. While Uttar Pradesh has emerged as the leader in overall vehicle sales, riding on its two-wheeler and CV volumes, Maharashtra leads in the passenger vehicle or car segment specifically. For OEMs, understanding these nuances across states and cities will be the key to tap into diverse demand pockets and bolster growth in the future. Meanwhile, customers stand to gain from the competitive intensity to launch new models, offer attractive pricing and strong after-sales experience.

FAQs

Q1. Which state has the highest car sales in India?

Maharashtra leads in car or passenger vehicle sales, averaging 65,000-70,000 units per month. Mumbai's contribution is significant here.

Q2. Why does Uttar Pradesh top overall vehicle sales?

UP's massive population and growing economy is fuelling two-wheeler and commercial vehicle demand, along with increasing rural incomes.

Q3. Which companies have plants in Maharashtra?

Key automakers like Mahindra, Mercedes Benz, Volkswagen, Skoda etc. have manufacturing plants in Maharashtra.

Q4. What is driving commercial vehicle sales in India?

Government infrastructure projects and mining activities are propelling commercial vehicle sales across states like UP, Gujarat etc.

Q5. Is the Indian auto market expected to keep growing?

Yes, India offers massive room for growth given the low vehicle penetration. More model launches, easier financing and rising incomes will aid growth.