Shifting Trends in India’s Car Market
A recent survey by Grant Thornton Bharat, titled “Shifting Gears: Understanding Passenger Vehicle Market Trends,” highlights significant changes in consumer preferences in India’s automotive sector during the festive season.
Consumer Preferences
The survey shows that 85% of respondents are interested in premium vehicles, with a notable increase in preference for hybrid vehicles over electric vehicles (EVs). While 40% of respondents favor hybrid vehicles, only 17% prefer EVs. Additionally, 34% still prefer petrol-powered vehicles, indicating a transitional market.
Challenges and Opportunities
Hybrid vehicles are seen as a bridge technology, helping consumers transition to alternative powertrains. However, the lack of robust charging infrastructure and incentives remains a challenge for full EV adoption. Saket Mehra, Partner and Auto & EV Industry Leader at Grant Thornton Bharat, notes a 30-35% increase in early October sales compared to September, suggesting positive market dynamics.
Market Dynamics
Utility vehicles (UVs) and sports utility vehicles (SUVs) dominate the market, with a 13% year-on-year growth, accounting for 65% of passenger vehicle sales. Despite a slow first half of FY25, demand for UVs and SUVs remains strong. Inventory levels are high, with 7.9 lakh units worth Rs 79,000 crore stockpiled as of September 2024.
Industry Response
Leading automakers like Maruti Suzuki, Tata Motors, and Mahindra & Mahindra are introducing subscription models to attract younger consumers. As digital engagement increases, automakers are blending online and offline experiences to enhance customer journeys. Safety features have become a top priority for buyers, surpassing design and performance.
Future Outlook
With only 30 million Indians currently able to afford a vehicle, there is significant growth potential in the passenger vehicle market. Rising disposable incomes are making car ownership more accessible. Nearly 90% of respondents expect substantial festive season discounts, prompting manufacturers to offer attractive deals and financing options.
Doubts Revealed
Grant Thornton Bharat -: Grant Thornton Bharat is a company that provides services like auditing and consulting to businesses in India. They help companies understand market trends and make better decisions.
Hybrid vehicles -: Hybrid vehicles use both a petrol or diesel engine and an electric motor to run. They are considered a bridge technology because they help people transition from traditional cars to fully electric ones.
EVs -: EVs stand for Electric Vehicles, which run entirely on electricity and do not use petrol or diesel. They are considered more environmentally friendly.
Subscription models -: Subscription models in the car market allow people to use a car by paying a monthly fee instead of buying it. This can be more flexible and affordable for some people.
Digital engagement -: Digital engagement means using online tools and platforms to interact with customers. Car companies use this to show their cars and services to people on the internet.
Festive discounts -: Festive discounts are special price reductions offered by companies during festivals. In India, car companies often give discounts during festivals like Diwali to attract more buyers.
