Shifting gears: Understanding passenger vehicle market trends in India

The festive season is a critical period for the Indian automotive industry, since traditionally, it drives a significant portion of annual sales. Consumers usually time their vehicle purchases with celebrations and auspicious dates.

We recently conducted a survey to determine the factors which drive sales of passenger vehicle (PV) and vehicle preferences amongst consumers this festive season. Our Festive Auto Survey 2024 provides a comprehensive analysis of the current trends in the passenger vehicle market in India. It analyses consumer sentiments, and the impact on vehicle buying trends during the festive season.

Key highlights of the survey

1. Vehicle buying trends:

  • The festive season has traditionally been a peak period for vehicle purchases, although the domestic passenger vehicle (PV) market witnessed slow growth in H1FY25.
  • SUVs and UVs remain the most popular choices among buyers, with a 65% share in domestic PV sales.

2. Consumer buying trends:

  • On the consumer side, there is a growing trend towards premiumisation, with over 85% of respondents open to exploring high-end models.

Consumer buying trends in the last two years

What kind of vehicle would you prefer to buy?

3. Electric vehicles market:

  • Reduced preference for Electric vehicles (EVs) due to concerns about charging infrastructure and a rising preference for hybrid vehicles. Tax exemptions for strong and plug-in hybrids in certain states have further encouraged this shift.
  • While India’s EV market is expected to grow, adoption is likely to trail behind other major economies.

Changes in preferences for EVs over the last two years

  • Preference for hybrid and diesel vehicles has remained constant
testimonial client avatar
“The festive season is a crucial moment for the auto industry, making up for 30-40% of annual sales. Although the growth rate for this festive season may be muted by the high base from previous year, the industry remains optimistic that absolute sales volumes are likely to expand. Shifting market dynamics, such as rising consumer interest in premium models, expectations for heavy discounts, and the increasing role of digital platforms, present automakers with a unique opportunity to adapt and drive sales during this pivotal period.”
Saket Mehra Partner and Auto & EV Industry Leader, Grant Thornton Bharat

What is the reason for buying new vehicle?

Strong economic growth, stable monetary policy and high credit growth have contributed towards increasing the purchasing power of top-earning Indians over the past decade.

What is the first thing that you look for in a car?

In India, growing consumer awareness about safety has led to a rising demand for vehicles with advanced safety features. In response, automakers are focusing on incorporating the latest safety technologies into their vehicles.

How do you prefer to buy your new vehicle?

Digital platforms have become increasingly important in the car-buying process, with 74% of consumers now using social media and car websites to research and evaluate vehicles. 

However, actual purchases are still predominantly made through physical channels prompting auto dealers to shift to “phygital”.

Is Digitisation the way forward?

Conclusion

As India’s automotive sector witnesses around 30-40% of sales during the festive season, it is the right time to understand and analyse consumer buying trends.

Despite the current challenges of high inventory levels and consumer expectations for discounts, the Festive auto survey 2024 indicates that the industry is well-positioned for growth. With only 30 million Indians currently able to afford a vehicle, the significant under-penetration presents a substantial opportunity. 

In the medium to long term, the outlook remains optimistic, driven by rising disposable incomes, a burgeoning affluent class, and technological advancements in vehicle offerings.

Festive Auto Survey 2024 Report

Festive Auto Survey 2024 Report

The festive season is a critical period for the Indian automotive industry, since traditionally, it drives a significant portion of annual sales.

Download the report [2829 kb]