India’s Car Market: Slow Growth Expected in 2025, SUVs and Electric Cars on the Rise
The passenger vehicle (PV) industry in India is anticipated to witness moderate growth in the fiscal year 2025, with sales volumes expected to expand by 3% to 5%, according to CareEdge.
Growth Trends
In FY24, the PV industry saw a 7.4% increase, but this growth is slowing down. Analysts attribute this to stabilizing pent-up demand post-Covid recovery, higher vehicle prices, and high interest rates.
Factors Affecting Growth
Several factors are contributing to the expected moderate growth in FY25:
- Stabilizing post-Covid demand
- Higher vehicle prices
- High interest rates
Despite these challenges, the industry is expected to maintain some growth due to strong demand for new model launches and SUVs, as well as potential interest rate cuts in the latter half of FY25.
SUVs and Electric Vehicles
SUVs have become increasingly popular, with sales surging by 22.4% in FY24. This trend is expected to continue, as consumers prefer vehicles offering greater utility and safety benefits.
The electric vehicle (EV) segment is also gaining traction, recording a 90% year-on-year growth in FY24. Electric car volumes are projected to reach between 1.3 to 1.5 lakh units in FY25, driven by improving infrastructure and growing consumer acceptance of eco-friendly alternatives.
Challenges for Entry-Level Vehicles
Entry-level vehicles face reduced demand due to economic challenges in both rural and urban markets. Hardik Shah, Director at CareEdge Ratings, noted that while premium vehicles are expected to thrive, entry-level variants are likely to see continued diminished demand.
Future Outlook
The industry anticipates a bifurcated market landscape, with premium vehicle segments expected to thrive on heightened demand for luxury and high-end models. This reflects evolving consumer preferences shaped by economic conditions and demographic shifts.
