Entry-level cars below ₹5 lakh witness a sharp decline in demand
Demand for entry-level cars below ₹5 lakh has sharply declined in India, with their market share dropping from 33.6% in 2015 to 0.03% in 2023.
The demand for entry-level cars priced below ₹5 lakh has sharply declined among Indian customers. Over the last few years, consumers have shown a preference for cars with advanced features and higher safety ratings, leading to a significant shift in the market. In 2015, cars below ₹5 lakh held a market share of 33.6 per cent, but by 2023, this figure plummeted to 0.03 per cent. Notably, even affordable models from Maruti Suzuki, India's largest car-selling company, are witnessing a drop in sales, reported Live Hindustan.
Substantial increase in the price of entry-level cars
During the past five years, the prices of cars in the sub- ₹5 lakh segment have experienced a substantial increase of 65 per cent. In comparison, vehicles in the SUV segment, luxury cars, and sedans have seen a comparatively lower price hike of 24 per cent. The decline in sales is evident in Maruti Suzuki's affordable models like autos and S-Presso.
On the contrary, cars priced between ₹7 to 8 lakh, such as Baleno, Brezza, Grand Vitara, and Maruti Suzuki, have witnessed higher sales.
Why has the sales declined?
Shashank Srivastava, senior executive officer at Maruti Suzuki, said that the decrease in demand for economical cars is not solely due to reduced incomes following the Covid pandemic. Instead, customers are now prioritising cars with enhanced connectivity features, superior family safety ratings, entertainment options, and stylish designs. The trend indicates a willingness among consumers to invest in vehicles equipped with larger infotainment screens, 360-degree cameras, and sunroofs.
Despite the economic challenges posed by the pandemic, consumers are willing to spend on cars that offer a more comprehensive and modern driving experience, the report added.