With market uncertainty, car buyers turn to lower trims instead of top-end variants

Tepid sentiment in FMCG, Retail and IT is pushing car buyers towards lower-end vehicle models instead of the top trims as was the trend in the last few years.

“In FY25, the Indian passenger vehicle market witnessed a noticeable shift towards base and mid-variants, reflecting heightened price sensitivity amid rising vehicle prices, inflationary pressures, and higher financing rates,” Hardeep Singh Brar, Senior Vice President and National Head Sales & Marketing, Kia India, told businessline.

“The integration of premium features like sunroof, alloy wheels, etc amplifies the overall appeal of the vehicle and makes it more value for money for the customers,” he added.

He said Kia India was strategically optimising mid-trims at regular intervals to make it more attractive for discerning new-age customers.

Though neither companies nor industry bodies like Society of Indian Automobile Manufacturers (SIAM) or Federation of Automobile Dealers Associations (FADA) have the exact sales volumes of the vehicles model wise, sources in the industry said the demand has come down by 30-50 per cent, depending on the segment.

For instance, Skoda Auto India said that it has increased the production of the newly launched Kylaq in the lower trims to more than 50 per cent from around 35 per cent earlier because of the higher demand for the lower trims.

“We will increase the production to 60 per cent of the lower trims of the Kylaq at least till May (end). Then we will go to 50:50 (lower trims and top variants), as we have to meet the demand of lower trims at the moment, otherwise customers have to wait for long,” Petr Janeba, Brand Director, Skoda Auto India, said.

Tariff fallout

According to an industry veteran, till the US tariff rates are settled, especially for Tech and Pharma sectors, the domestic sales would be impacted because of buyers from these two sectors.

“The economy is impacted, the stock markets are hit and gold prices are at an all-time high, so all these factors may hit the auto sales. Having said that, we have to wait and watch the situation as all these factors could be temporary and sales should bounce back later in the year,” he said.

Country’s largest passenger cars maker, Maruti Suzuki India (MSIL) has another worry about entry/small car not growing.

“For the cars sales to revive, small cars have to become more affordable for the people of the income levels, which they buy car. That requires lower taxes and less cost on regulation – both are required,” RC Bhargava, Chairman, MSIL said.

Because of the slow growth in the industry, MSIL is also not starting its another plant in Gujarat, he said. “There is no hurry about doing anything there because to the market growth of one per cent, two per cent why would I put up another million units in a hurry? Unless the market shows there is a need, I have enough capacity coming up in Kharkhoda (Haryana), some is coming up at Manesar, some is coming up in Gujarat plant-I,” Bhargava added.

According to SIAM, the total passenger vehicles wholesales in India declined by two per cent in FY25 to 43,01,848 units as compared with 42,18,750 units in the previous financial year.

However, the passenger cars segment that include small cars, hatchback and sedans, declined by 12.6 per cent to 13,53,287 last year as compared with 15,48,947 in April-March 2023-24.

Published on April 30, 2025