He added that sales for the A-segment (sub-compact cars) will continue to shrink, at 15 per cent year-on-year to 50,000 units in 2013, due to limited models offered and stricter credit control.
"The A-segment will continue to shrink as new entry level customers jump to B-segment offerings, which is a worldwide phenomenon," Mr. Mukhtyar said.
"Volume segments such as B, C and MPV will see a drop in sales, despite greater hybrid vehicle sales and launch of new models," he said.
"With the duty exemption for hybrid vehicles extended until the end of 2013, new models in the pipeline and growing customer acceptance, hybrid vehicle sales are expected to nearly double as compared to 2012," he said.
Frost & Sullivan predicts hybrid vehicles sales to reach 35,000 units in 2013, from an expected 18,000 units in 2012.
Mr. Mukhtyar expects the Government to further introduce incentives on income tax as an initiative to promote green technology as
positions itself to be an energy efficient vehicles (EEV) hub.
"However, there are no special tax breaks for pure electric vehicles, therefore its prices would still remain fairly high," he said, adding that the key selling points of the hybrids are the environment friendly image, fuel efficiency and competitive price.
Mr. Mukhtyar said that the challenges to adoption of electric vehicles are primarily consumer concerns regarding maintenance, resale value, cost of ownership, safety and recharging infrastructure.
The B-segment (small and compact cars) is likely to see a decline of 4 per cent year-on-year to 100,000 units in 2013 while the C-segment (mid-sized sedans) will see a fall of 2 per cent year-on-year to 225,000 units.
The D-segment (premium and large sedans) is likely to remain flat to reach 22,000 units in 2013 while growth in the SUV segment will continue to rise, expected at 2 per cent year-on-year to 19,000 units in 2013 due to a variety of models, new launches, attractive design and features offered by various automakers.