Sales of entry-level cars affordable for all sections of the middle classes are seeing a decline in their demand and sales. The automobile sector has been hit with declining sales over the past 10 months which have led to job losses and production cuts. The downturn has now affected the sales of small and entry level cars as well, with customers being unable to afford them due to high acquisition price and rising cost of petrol and diesel.
GoNews had reported earlier how two-wheelers were increasingly going out of reach for rural Indians. In case of two wheelers, sales of motorcycles within the ₹70,000 bracket declined by 41% in the first 9 months of FY 2022, while those above the ₹70,000 saw a decline of only 3% in the same period.
A similar trend can be seen in cars, with sales being driven by higher-end, expensive models for economically stronger consumer base.
The current data upends the perception that India’s market is dominated by small cars on the back of an emerging middle class.
The market share of cars priced at ₹5 lakh have seen their share decline to 10.5% for the first 11 months of 2022-23, which stood at 26% in 2018-19. On the other hand, the luxury car segment sales rose 11.5% in the same period with models priced from ₹12- 15 lakh. According to Shashank Shrivastava, executive director of sales and marketing of Maruti Suzuki India, car prices have risen faster than people’s incomes.
This means that as overall car sales go down and luxury car sales increase, more people are being pushed out of car ownership. The Ukraine-Russia conflict has further pressurized.
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