As an auto manufacturing hub, Tamil Nadu has always been an important auto retail market as well. But of late the state has been pipping the all-India average in terms of year-on-year growth particularly in volume critical passenger vehicle and two-wheeler segments. In passenger vehicles, the sales spurt is driven by rising disposable incomes, increasing urbanization, and better road infrastructure.
According to automotive consulting firm JATO Dynamics, car sales in Tamil Nadu grew by 17.04% from 190,404 units in January-October 2022 to 222,856 units in the same period in 2023. The state’s two-wheeler sales rose by 4.64% from 11,32,080 units in January-October 2022 to 11,84,559 units in the same period in 2023.
“In terms of passenger vehicles, Tamil Nadu is India’s fifth largest market behind Maharashtra (391,725 units), Uttar Pradesh (329,571 units), Gujarat (293,033 units) and Karnataka (247,902). In two-wheelers, the state ranks third behind UP (18,86,483 units) and Maharashtra (13,52,588 units),” says Ravi Bhatia, president JATO Dynamics.
A couple of factors are responsible for the top gear growth. “The per capita income in Tamil Nadu has been increasing in recent years, boosting disposable incomes,” says Bhatia. Also, road infrastructure has improved, making it convenient for people to use cars and two-wheelers and boosting sales, he adds. The car and two-wheeler retail sales numbers this year from the Federation of Automobile Dealers Associations (see table) tell the story. In cars and SUVs, TN’s retail sales growth has been ahead of the national curve every month this financial year except September (which local dealers say was due to a pipeline skew across automotive categories). In two-wheelers, April and May trailed the national curve coming off a high base and September saw a skew, but the rest of the months saw the TN growth curve beating the all-India average. Auto experts say the retail boost is thanks to TN’s economic boom.
“At the national level, sales of entry level vehicles, particularly passenger vehicles and two-wheelers, were impacted as rural demand remained tepid. Tamil Nadu is more urbanized, with better average purchasing power, and overall sales registered a better growth rate,” says Shruti Saboo, associate director, India Ratings & Research. Also, she adds, because of lower taxes “on-road price of any passenger vehicle is 2%-3% lower than in neighbouring states”.
That’s borne out by the performance of some of the state’s manufacturing heavyweights. Hyundai, for example, has seen a sharper growth in its TN sales than nationally. “Hyundai has a robust 15% market share in Tamil Nadu and while we have grown by 9.5% at an all-India level during the January-October period this year, our growth in Tamil Nadu is 11.6%. Clearly, there is strong support for the Hyundai brand in Tamil Nadu owing to our manufacturing base and roots,” says Tarun Garg, COO, Hyundai Motor India.
In some auto segments, the state’s changing automotive habits have resulted in a vroom. Take higher displacement motorcycles. “Traditionally TN has been a market for cruisers but we see riding preferences changing as well,” says a Royal Enfield spokesperson. Three motorcycle models from Royal Enfield — the Classic 350 , Hunter 350 and Meteor 350 — are among the Top 10 motorcycles in the higher than 125cc segment in Tamil Nadu. “Tamil Nadu is the second highest contributor to Royal Enfield’s national sales and has the second highest sales for five of the eight models in the company’s portfolio — Hunter, Classic, Scram, Himalayan and the 650-Twins,” adds the spokesperson. “During the festive season in Tamil Nadu, we have registered double digit growth of close to 15% this year.”
Industry watchers say part of this boom is the multiplier effect of TN’s investment push. But as the Royal Enfield example shows, the state’s conservative tastes are changing too. And that, as any auto marketer will tell you, could well be a big deal.
