NEW DELHI: India’s passenger vehicles sales grew 26.7% in the fiscal year 2022-23, as chip shortages eased and demand for sport utility vehicles (SUVs) surged, an auto industry body said on Thursday.

Wholesale passenger vehicle volumes for the year rose to 3.9 million units in the year ended March 31, from 3.1 million units a year ago, the Society of Indian Automobile Manufacturers (SIAM), which records sales to dealers, said.

Despite inflation trending higher through the year, a mix of improved chip supply, higher incomes and pent-up demand, especially for SUVs supported sales at Indian automakers.

Buying ahead of implementation of new fuel emission norms, and strong demand during the festival season also drove sales towards the end of the year.

Two-wheeler sales, an indicator of the financial health of India’s lower- to middle-income households, also rose 16.9%.

Earlier this month, the Federation of Automobile Dealers Associations (FADA), which publishes retail sales data, said growth is expected to taper to a low single-digit percentage in the current fiscal, mainly due to inflation, price hikes by carmakers and regulatory changes.

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India’s annual retail inflation eased to 5.66% in March from 6.44% the previous month, government data showed on Wednesday.

Automakers such as Maruti Suzuki India Ltd and Hero MotoCorp Ltd have hiked prices to offset higher input costs due to inflation and new safety and emission norms.

Total passenger vehicles sales volume saw a growth of 4.5% in March, SIAM data showed.