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Due to rise in raw material prices and rising production costs of vehicles, there has been a 50% rise in the prices of passenger vehicles over the past 5 years.The average price of PVs in India was Rs 7.65 lakh during the financial year 2018-19, and it has now increased to Rs 11.5 lakh during the financial year 2023-24.

The wholesale vehicle sales have crossed a record figure of 4.1 million in 2023. Last year, the highest contribution to the record sales was from the SUV segment. The SUV’s share in PV sales increased from 42 percent in 2022 to 48.7 percent last year. In comparison, hatchback segment’s market share decreased from 34.8 percent in 2022 to 30 percent in 2023, and sedan market share also declined from 11 percent in 2022 to 9.4 percent.

According to Shashank Srivastava, Executive Officer of Sales and Marketing Division at Maruti Suzuki India, in 2022, 27% of car buyers opted for the top variant, but last year, the figure has increased to 43%. Customers are now inclined towards vehicles with more features than before. Additionally, every model in the entry segment now comes with air conditioning, whereas most cars in this segment didn’t had AC in the past, contributing to the overall price increase.

Several essential regulations have also been revised to enhance car safety in India contributing to the increased production cost. Premium features have been added to cars even in the entry segment, causing the average price of cars to rise in last five years.