Request for entry-level cars priced below ₹5 lakh has dropped significantly among Indian customers. Over the past few years, consumers have shown a preference for cars with advanced features and higher safety ratings, leading to a significant shift in the market. In 2015, the cars below ₹5 lakh held a market share of 33.6 per cent, but by 2023, this figure has fallen to 0.03 per cent. Notably, even affordable models from Maruti Suzuki, India’s largest car sales company, are witnessing a decline in sales, Live Hindustan reported.
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Significant increase in the price of entry-level cars
During the last five years, car prices in sub- ₹The 5 million segment saw a significant growth of 65 percent. In comparison, vehicles in the SUV segment, luxury cars and sedans saw a relatively lower price increase of 24 percent. The decline in sales is visible in Maruti Suzuki’s affordable models like the sedans and the S-Presso.
On the contrary, the cars are priced in between ₹7 to 8 lakh, such as Baleno, Brezza, Grand Vitara and Maruti Suzuki, have seen higher sales.
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Why are sales down?
Shashank Srivastava, senior executive officer at Maruti Suzuki, said the drop in demand for economy cars is not just due to the drop in revenue following the Covid pandemic. Instead, customers now prioritize cars with improved connectivity features, superior family safety ratings, entertainment options and stylish designs. The trend shows consumers’ willingness to invest in vehicles equipped with larger infotainment screens, 360-degree cameras and sunroofs.
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Despite the economic challenges posed by the pandemic, consumers are willing to spend on cars that offer a more comprehensive and modern driving experience, the report added.