Car sales to fleet operations, including those to app-based cab aggregators such as Ola and Uber, have nearly doubled last fiscal and are expected to significantly outpace overall industry growth to get closer to the pre-pandemic peak this year. According to industry estimates, 137,000 vehicles were sold to operators in the last financial year, marking a growth of 95% compared to FY22.
While fleet sales are expected to grow by over 40% this financial year, it will still be short of the peak of 225,000 units sold to fleet operators in FY19. Overall sales of passenger vehicles are expected to grow by 5-7% this fiscal. Senior industry executives expect vehicle sales to the taxi segment and cab aggregators to continue to rise and outpace overall growth in the passenger vehicle segment, albeit on a low base, in the coming months.
Buoyed by increasing commuting and travelling post-pandemic, as well as a push for electric vehicles (EVs), fleet sales are expected to rise further. Fleet sales had fallen by 23% and 69%, respectively, year-on-year in FY20 and FY21 as the outbreak of Covid-19 in early 2020 kept vehicular movement at a bare minimum.
With the reopening of schools, colleges, and offices, sales grew 30% on-year in FY22, followed by a 95% rise last fiscal. Market leader Maruti Suzuki has already touched the pre-pandemic peak of about 113,000 units in the previous fiscal. The company said robust demand from the tourism sector has helped boost commercial sales, as it holds a share of 83% in the segment in India.
“Travel and tourism have been the biggest drivers of car sales to commercial operators,” said Shashank Srivastava, senior executive director (marketing and sales) at Maruti Suzuki. “With the health scare that erupted with the pandemic receding, people have started becoming comfortable using shared mobility. We expect strong double-digit growth in fleet sales this fiscal.”
Fleet sales accounted for 17% of incremental sales in the passenger vehicle segment last fiscal when about 820,000 additional units were sold over the previous year. Bhavish Aggarwal, cofounder and chief executive of Ola Cabs, said, “This (ride-hailing) business is now doing well and is very profitable. During Covid, we faced some supply issues… When supply went down, customer experience was affected. Now, with supply coming back and with our operational rigour, customer experience is improving.”
Shailesh Chandra, managing director of Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, confirmed rising demand from the fleet segment. “Starting of both official and leisure air travel, commencement of ‘work-from-office’ and increasing intracity travel are some of the important factors behind bringing the rhythm of travel back to our roads. We are getting balanced demand from fleet operators, serving corporate fleet and e-hailing companies.”
The homegrown auto major has inked agreements to supply around 40,000 electric vehicles to the likes of Uber and BluSmart in the last few months. Tata Motors currently has the X-Pres T EV sedan on offer for commercial operators.
Furthermore, with the central and state governments looking at replacing more than half a million diesel and petrol cars with electric vehicles, fleet sales will only head north mid-term, industry insiders said. “The demand for EVs in the fleet segment will continue to show promising growth,” Chandra said. “The government’s objective of electrifying its fleet and commitment of corporates for moving towards sustainable mobility along with significant operational cost advantage and a pleasant drive will help propel the growth.”
In conclusion, sales to the fleet segment have seen a significant rise, and with increasing demand for shared mobility and a push towards electric vehicles, this trend is expected to continue in the coming years. Fleet sales, including those to app-based cab aggregators, are set to outpace overall industry growth, and with the government’s focus on electrification, demand for electric vehicles in the fleet segment is expected to show promising growth.
