The demand for premium vehicles in India is on the rise as the festive season approaches, according to a survey by Grant Thornton Bharat. The report attributes this shift in consumer preferences to increased disposable incomes and a favorable economic outlook.
Titled Shifting Gears: Understanding Passenger Vehicle Market Trends, the survey shows that over 85% of respondents expressed interest in purchasing premium vehicles, signaling a major shift in the country’s automotive market.
The findings reveal a growing inclination towards hybrid vehicles, with 40% of participants favoring hybrids, compared to only 17% who prefer electric vehicles (EVs). This trend suggests that while consumers are open to luxury and sustainable options, there remains a degree of caution regarding full commitment to EVs, primarily due to insufficient charging infrastructure and the need for stronger incentives.
“This indicates a transitional phase in the market, where hybrid vehicles are poised to serve as a bridge technology, familiarizing consumers with alternative powertrains and paving the way for greater EV adoption in the future,” the report says.
Saket Mehra, Partner and Auto & EV Industry Leader at Grant Thornton Bharat, highlighted the positive sales trends, noting a 30-35% increase in vehicle registrations in early October compared to September. He emphasized the importance of automakers adapting to evolving consumer preferences, particularly the growing demand for premium models and enhanced digital engagement.
“With consumers also anticipating substantial discounts this festive season, the automotive industry is presented with a unique opportunity to drive demand. Long-term economic growth and rising disposable incomes will further bolster the outlook for India’s passenger vehicle market,” Mehra said.
Utility vehicles (UVs) and sports utility vehicles (SUVs) continue to dominate the sector, recording a 13% year-on-year growth and now accounting for 65% of total passenger vehicle sales. Despite a sluggish first half of FY25, where overall domestic sales increased by just 0.5%, the sustained demand for UVs and SUVs highlights a consumer shift toward versatile vehicles.
However, the market faces challenges with inventory levels, which stood at 7.9 lakh units worth Rs 79,000 crore as of September 2024. Leading manufacturers, including Maruti Suzuki, Tata Motors, and Mahindra & Mahindra, are responding by introducing subscription models to attract younger consumers who favor flexibility over traditional vehicle ownership.
As digital engagement rises, automakers are merging physical and online experiences to enhance customer journeys, integrating online research tools with offline test drives and dealership interactions. Increasing awareness regarding vehicle safety is also reshaping buyer priorities, with advanced safety features now ranked above traditional factors like design and performance.
Despite only 30 million Indians currently able to afford a vehicle, there remains significant potential for growth in the passenger vehicle market, driven by rising disposable incomes. Nearly 90% of respondents anticipate substantial festive discounts, prompting car manufacturers to respond with attractive offers, exchange programs, and financing options aimed at stimulating demand.
(Inputs from ANI)