New Delhi: Despite a lackluster year, the passenger vehicle (PV) industry in India recorded 2.6per cent year-on-year growth in wholesales during FY 2024-25.
This growth can be attributed to the high base of previous years, shrinking discretionary income, subdued urban demand, and broader macroeconomic factors.
As per initial industry estimates, car manufacturers dispatched 4.34 million units from the factories to the dealers during the year, up from 4.23 million units in FY 2023-24.
FY25 marks the fourth consecutive year of year-on-year growth for the industry; however, the growth rate is the lowest in the past four years.
Interestingly, SUVs led the market with double-digit growth, making up about 55per cent of new car sales, while demand for small cars and sedans continued to decline.
If you see the CAGR for the last five years, it is around 4.6per cent. SIAM made a forecast in the beginning of the year that the growth will be to the tune of 3per cent to 4per cent, however it is now at around 2.6per cent to 2.7per cent, Partho Banerjee, senior executive officer- marketing and sales, Maruti Suzuki said.
He also noted that a modest 1-2per cent growth is expected in FY26, attributing the moderation to the high base effect of previous years.
Car market leader Maruti Suzuki, which takes up 40per cent share of the domestic market sales, said demand from rural markets has resulted in a growth of about 10per cent for the company, while urban demand has largely remained flat this year.
Amid declining demand for body types other than SUVs, the company has discontinued production of its Ciaz sedan.
“From time to time based on the market needs and the feedback of the customers, we keep on revalidating our product portfolio. Presently, we have taken a call that we need to stop the production, and then again, we will be taking a call based on the market requirement,” said Banerjee.
However, the company’s WagonR has maintained its position, securing the top spot in the Top 10 cars sold for the year and making it the best-selling car for four consecutive years.
Interestingly, the competition for the second, third, and fourth positions in the PV segment remained tight this year. However, Hyundai held onto its second spot, while Tata Motors surpassed Mahindra, despite a year-on-year decline for both companies.
According to Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, this was a “challenging year marked by fluctuating demand”.
The only two gainers in the market were Mahindra & Mahindra and Toyota Kirloskar, both achieving double-digit growth and recording the highest-ever sales in their histories.
“The growth has been fuelled by the strong and consistent adoption of SUVs, MPVs and hybrids, further reinforced by robust export momentum and deeper engagement in Tier II and III cities,” Toyota Kirloskar Motor Vice President, Sales-Service-Used Car Business & Profit Enhancement, Varinder Wadhwa said.
Looking ahead, overall demand growth will be shaped by macroeconomic factors such as consumption growth, inflation, infrastructure spending and global geopolitics. However, industry momentum is expected to be driven by continued innovation in line with evolving customer preferences, Chandra said.
