AMID DWINDLING CAR gross sales on the entry degree, the market is witnessing a exceptional transformation because it sees a pointy uptrend in favour of premium fashions on the mid-level section and above.
Hyundai Creta, a premium feature-laden mid-segment SUV with costs beginning at Rs 11 lakh-plus, has emerged because the nation’s high promoting automotive in June 2025. With Maruti’s Ertiga, a Multi-Utility Car, the 2 accounted for nearly two-thirds of all automobiles bought within the month.
What can also be exceptional is that almost one in three Creta consumers is a first-time automotive proprietor. Officers in Hyundai mentioned the contribution of first-time consumers in Creta’s buyer base has gone up sharply to 29 per cent in 2024 from simply 12 per cent in 2020.
The automotive market has had a blended 12 months in 2024-25. Whereas it hit a brand new gross sales peak at 4.3 million, the expansion was sluggish at simply round 3 per cent, primarily as a result of repeatedly declining gross sales of entry degree automobiles. However different fascinating traits unfolded in the course of the 12 months: in phrases of powertrains, CNG overtook diesel for the primary time ever. The agricultural share crossed 40 per cent, once more a brand new excessive.
Whereas sports activities utility automobiles or SUVs proceed to steer, the quickest rising section was the MPVs (Multi-Goal Autos), with rural or suburban gross sales accounting for a significant chunk. Hatchbacks accounted for lower than 1 / 4 of the market, a brand new low. Hatchbacks and sedans put collectively, was lower than a 3rd of the market, and utility automobiles (SUVs, MPVs and vans mixed) account for almost 70 per cent.
First-time consumers are selecting the dearer SUV or MUV. However the business is split on who precisely is a first-time purchaser – particular person who buys her or his first automotive or a household getting its first automotive? These will not be the identical. In Creta’s case, it’s each, with month-to-month earnings starting from Rs 50,000 to Rs 2 lakh.
What is definite although is a transparent transfer in direction of premiumisation. In accordance with Tarun Garg, Complete-time Director & Chief Working Officer, Hyundai Motor India Ltd, the contribution of high-end options like ADAS-enabled automobiles elevated nearly six instances to account for 15 per cent of Hyundai’s total gross sales in 2024. Additionally, 50 per cent of all automobiles Hyundai sells is provided with a sunroof. “Moreover, we’re introducing excessive demand premium options in decrease variants throughout fashions facilitating a wider viewers to get a style of superior technology-led mobility options,” Garg mentioned.
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However in case of the UV section, prospects are mentioned to be largely choosing base variants or these simply above the bottom, primarily reflecting the propensity to eke out most bang for the buck.
The entry-level automotive section is in a nasty form, primarily because of two elements: larger price ticket of Rs 4 lakh-plus because of higher security norms together with six airbags, and sluggish earnings development within the decrease finish of client base. The larger drawback is that an entry-level automotive prices almost 4 instances the costs of a scooter or motorbike.
Slowing consumption development is a pattern that appears to be getting entrenched, regardless of some indicators of restoration in rural areas. Whereas actual wage development for rural agricultural and non-agricultural employees is offering some help to total consumption development, within the city areas, new demand is just not selecting as much as the degrees seen within the post-Covid part. Consequently, corporates are seeing their efficiency really fizzling out, particularly in city centres.
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Over the previous decade, gross sales of small automobiles have steadily declined, and in recent times, increasingly more shoppers are choosing the dearer mid-segment automobiles. This might replicate rising aspirations of first-time consumers, but additionally erosion of buying energy on the decrease finish of the patron pyramid. Automotive firms are figuring it out.
In accordance with business information, gross sales efficiency of entry-level automobiles priced under Rs 5 lakh – a vital indicator of demand within the economic system provided that this section largely attracts first-time consumers – is dire. This section used to account for almost 1,000,000 items a decade in the past – 9,34,538 to be exact in FY16. It has since declined to only 25,402 items in FY25. The Maruti Suzuki Alto, as an example, bought greater than 18,700 items in June 2019, and was the best-selling then. In June 2025, the Alto and S-Presso mixed bought somewhat over 6,000 items.
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Creta, a mid-segment automotive, alternatively ranked quantity within the charts promoting 15,786 items in June this 12 months. Regardless of being the top-selling automotive, its June gross sales have been lower than the typical month-to-month sale of 16,239 within the final monetary 12 months. A veteran business govt mentioned that is “clearly a Ok-shaped curve in automotive shopping for habits in India”.
In April-June 2025, passenger automobile gross sales declined 1.4 per cent over the identical quarter final 12 months, and passenger automotive gross sales declined by greater than 11 per cent in the identical interval. As such, not solely is the anticipated commencement in a rising economic system from two to 4 wheelers not occurring, the previous’s development itself is stalling. The 2-wheeler section gross sales dropped 6.2 per cent to 46.74 lakh items in April-June 2025, pulled down by bikes and mopeds. When juxtaposed, suggests a dwindling of buying energy on the decrease and middle-class segments
Within the automobiles’ section, it’s the utility automobiles, which aren’t precisely entry degree, or inexpensive, automobiles for a majority of Indians, which can be saving the auto sector from an entire meltdown, a pattern highlighted by the likes of the Creta and Ertiga being among the many high sellers in June, accounting for almost 66 per cent of all automobiles bought.
In accordance with information collected by the NGO Folks Analysis on India’s Shopper Financial system – which some carmakers confer with internally – automotive penetration in Indian households which have a yearly earnings of lower than Rs 4 lakh diminished to 1.4 per cent in FY20, from 1.9 per cent in FY16. Automotive penetration in households that earn between Rs 4 lakh to Rs 7 lakh yearly additionally diminished to eight.3 per cent from 12.1 per cent in the identical time interval. Households with incomes of lower than Rs 4 lakh and between Rs 4 lakh and Rs 7 lakh are mentioned to make up for round 80 per cent of all Indian households. Although FY20 was the most recent information accessible with a carmaker, they mentioned the pattern has not modified within the subsequent years.