October 30, 2024October 30, 2024
Car sales, a key indicator of India’s domestic consumption, have experienced a notable decline in urban areas, suggesting economic growth may weaken. This decline is primarily driven by the sub-Rs 10 million segment, which has been witnessing a continuous downward trend over the past few quarters.
The slowdown in the auto sector mirrors trends in other major growth sectors. Executives in the fast-moving consumer goods industry are also noticing early signs of weakness.
Tata Consumer Products Ltd. expresses concern over declining urban demand, while Nestlé India identifies metros and metros as areas under pressure, partly due to impact on demand. He pointed out that food inflation is at a high level.
On Tuesday, Maruti Suzuki India chairman RC Bhargava reported that retail sales across India rose 14% year-on-year, but sales in urban areas declined while growth was witnessed in rural areas. He linked the slowdown in urban sales to the upcoming Lok Sabha elections and erratic monsoon pattern.
Bhargava pointed out that despite strong traction during the Christmas season, there were no major issues related to semiconductors or unforeseen events like the pandemic, and domestic auto sales growth was “slightly slower”. did.
He expressed concern over the steep decline in the sub-Rs 1 million passenger car market, which once accounted for 80% of India’s car sales in 2018-19. He warned that the sector is not growing and could impact sales in the upper segment if the lower segments of the market do not improve.
According to the Federation of Automobile Dealers Associations (FADA), sales of four-wheeled passenger vehicles in urban areas fell by nearly 3% from 2024 to the first half of 2025, while sales in rural areas increased by nearly 5%. Sales of two-wheelers, three-wheelers, commercial vehicles and tractors also fell by 1-12% in urban areas.
The Ministry of Finance’s September Economic Review noted that rural demand is improving, as seen in higher sales of fast-moving consumer goods (FMCG) and increased sales of three-wheelers and tractors. But demand in urban areas has slowed due to weak consumer sentiment, fewer pedestrians due to above-average rainfall, and seasonal trends that make people less likely to make new purchases.
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