Car sales in urban areas are experiencing a slowdown, especially for entry-level vehicles

There is concern that the economic momentum in the Indian economy may be waning as a result of a noticeable drop in urban automotive sales, a crucial indicator of domestic consumption demand in the nation. The more cheap end of the market, the sub-Rs 10 lakh segment, has been the main cause of the demand reduction for a number of quarters.

Concerns over a slowing of the economic momentum in the Indian economy have been raised by the noticeable softening of automobile sales, a crucial indicator of domestic consumer demand in the nation, in metropolitan regions. The more cheap end of the market, the sub-Rs 10 lakh category, has been suffering for a number of quarters and has been the main cause of the demand reduction.

The car industry’s experience is similar to that of numerous other industries that serve as important indicators of the growing momentum. Some early indicators have already been identified by businesses in the fast-moving consumer goods (FMCG) industry. Concerns regarding the “softness” of urban demand have been raised by top executives of Tata Consumer Products Ltd., while Nestle India executives attributed the signs of “muted demand” in part to rising food prices and pointed to megacities and metro areas as pressure points. Maruti Suzuki India chairman

RC Bhargava stated on Tuesday that although the nation’s total retail sales increased by 14% from the previous year, sales in urban regions decreased while those in rural areas increased. He blamed the unpredictable monsoon and the Lok Sabha elections for the urban sales slump.

He emphasized that the market for passenger automobiles under Rs 10 lakh has experienced a steep fall, which is the main cause for concern. Around 2018–19, 80 percent of automobiles sold in India were in the sub Rs 10 lakh class; however, this percentage is not increasing, and this tendency may continue. There won’t be any feeders to the upper segment unless the lower end of the market expands,” he stated.

According to data from the Federation of Automobile Dealers Associations (FADA), sales of four-wheeler passenger cars in urban regions decreased by almost 3% in the first half of 2024–25, while sales in rural areas increased by nearly 5%. Actually, according to data from the dealers’ organization, sales of tractors, two-wheelers, three-wheelers, and commercial vehicles all decreased in urban areas during the same time period by 1–12%.

The September economic overview from the Finance Ministry shows that rural demand is still improving, as seen by rising sales of three-wheelers and tractors as well as volume sales of fast-moving consumer goods (FMCG).