India’s passenger vehicle market is set to surpass 4.5 million units in 2025 for the first time, as the industry anticipates the positive sentiment of December quarter to carry into the new year despite price increases.
The surge in demand comes along with a notable shift in pricing dynamics driven by the growing trend of premiumisation in the market, industry experts said.
Luxury cars are set to command an average price tag of ₹1 crore this year, up from ₹90.11 lakh in 2024, data collated by automotive analytics firm Jato Dynamics shows. Similarly, the average retail price of mass-market cars is expected to climb to ₹13 lakh from ₹11.64 in 2024.While the demand for SUVs is expected to remain strong in the new year, industry is also expecting a revival in demand for entry-level small cars, following the spurt in two-wheeler sales in recent months.
“OEMs (original equipment manufacturers) are carefully navigating the balance between enhanced features and affordability,” said Ravi Bhatia, president of Jato Dynamics.
The Indian passenger vehicle industry is undergoing a transformation from being a volume-driven market to a value-driven one amid changing consumer preferences and stricter regulatory standards.
Bhatia said the market is maturing faster than anticipated.
Most carmakers have revised prices in the range of 2-4%, attributing it to increasing commodity prices and operational costs besides the rupee’s fall against the US dollar.
Maruti Suzuki, Hyundai, Mercedes, BMW, Audi and Nissan are among carmakers that have increased prices of various models from January 2025.
Carmakers said it was necessary to offset rising costs even as they are trying to minimise the cost impact on customers.
Shailesh Chandra, president of Society of Indian Automobile Manufacturers (SIAM), recently said 2024 was reasonably good for the auto industry. “Positive consumer sentiments and the country’s macroeconomic stability helped in propelling reasonable growth for the sector across vehicle segments,” he said, adding that a stable policy ecosystem also helped.
Passenger vehicle sales grew by 4.2% to around 4.3 million in 2024 — the highest yet in a calendar year. In the quarter ended December, PV sales hit a record 1.06 million, up 4.5% on year, as per SIAM.
“As the new year commences with a positive sentiment, this momentum would further propel growth in 2025,” Chandra said. India is one of the few markets globally where car sales have rebounded sharply after the Covid-19 pandemic. Annual car sales crossed the 4-million mark for the first time in 2023 and bettered it in 2024.
The sales number is expected to further increase 5-6% this calendar, buoyed by rising economic activity led by rural consumption and the anticipated increase in government spending, Bhatia of Jato Dynamics said.
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Luxury cars are set to command an average price tag of ₹1 crore this year, up from ₹90.11 lakh in 2024, data collated by automotive analytics firm Jato Dynamics shows. Similarly, the average retail price of mass-market cars is expected to climb to ₹13 lakh from ₹11.64 in 2024.While the demand for SUVs is expected to remain strong in the new year, industry is also expecting a revival in demand for entry-level small cars, following the spurt in two-wheeler sales in recent months.
“OEMs (original equipment manufacturers) are carefully navigating the balance between enhanced features and affordability,” said Ravi Bhatia, president of Jato Dynamics.
The Indian passenger vehicle industry is undergoing a transformation from being a volume-driven market to a value-driven one amid changing consumer preferences and stricter regulatory standards.
Bhatia said the market is maturing faster than anticipated.
Most carmakers have revised prices in the range of 2-4%, attributing it to increasing commodity prices and operational costs besides the rupee’s fall against the US dollar.
Maruti Suzuki, Hyundai, Mercedes, BMW, Audi and Nissan are among carmakers that have increased prices of various models from January 2025.
Carmakers said it was necessary to offset rising costs even as they are trying to minimise the cost impact on customers.
Shailesh Chandra, president of Society of Indian Automobile Manufacturers (SIAM), recently said 2024 was reasonably good for the auto industry. “Positive consumer sentiments and the country’s macroeconomic stability helped in propelling reasonable growth for the sector across vehicle segments,” he said, adding that a stable policy ecosystem also helped.
Passenger vehicle sales grew by 4.2% to around 4.3 million in 2024 — the highest yet in a calendar year. In the quarter ended December, PV sales hit a record 1.06 million, up 4.5% on year, as per SIAM.
“As the new year commences with a positive sentiment, this momentum would further propel growth in 2025,” Chandra said. India is one of the few markets globally where car sales have rebounded sharply after the Covid-19 pandemic. Annual car sales crossed the 4-million mark for the first time in 2023 and bettered it in 2024.
The sales number is expected to further increase 5-6% this calendar, buoyed by rising economic activity led by rural consumption and the anticipated increase in government spending, Bhatia of Jato Dynamics said.
