The current fiscal year is projected to close with a record volume of 42.9 lakh units in the car market. Analysts suggest that the industry has established a solid foundation and may take some time before experiencing rapid growth again. The surge in car bookings and purchases witnessed in recent years is expected to taper off as pent-up demand is met.
Ravi Bhatia, the president and director at research firm JATO Dynamics, highlighted various factors contributing to the subdued growth in FY25. Factors include the increase in car prices in previous years and the subsequent fulfillment of Covid-related production shortfalls. Bhatia also noted a shift towards used cars gaining traction over new car sales, particularly in the entry-level segment.
Following initial concerns about demand during the onset of the Covid outbreak in March 2020, the rapid rebound in sales caught many by surprise. Global semiconductor shortages led to significant waiting periods across brands, with pending deliveries peaking at 7 lakh units. As production ramped up and semiconductor supply improved, most of the pent-up demand has been met, prompting companies to offer special campaigns and discounts to drive sales.
Maruti Suzuki’s senior executive officer Shashank Srivastava and Honda Cars India’s VP Kunal Behl foresee muted growth or minimal single-digit growth based on the current analysis. The industry faces challenges ahead as it navigates through the evolving market dynamics.