April auto sales: SUVs race ahead while small cars lose momentum
Entry-level cars, which are generally smaller, simpler, and more fuel-efficient, witnessed a sharp drop in sales during April, while the utility vehicle segment continued to race ahead at full throttle.
The sustained decline in demand for budget-friendly cars in recent months has also prompted companies to alter their production plans. Maruti Suzuki, the country's leading car manufacturer, reported a 45% drop in sales of mini-segment cars, comprising the Alto and S-Presso.
The company dispatched 6,332 units to dealers in April, compared to 11,519 units in the same month last year, according to its April sales update. The consistent fall in entry-level car sales also led the company to reduce production to 9,714 units in April from 13,702 units a year earlier.
Maruti Suzuki has repeatedly voiced concerns about the decline in small car sales. 'Growth in the domestic market has been very limited. For a country with such low penetration of cars, the growth rate of 2–3% is not going to increase it at all. It is a matter of some worry,' said R.C. Bhargava, chairman of Maruti Suzuki, during a post-results media briefing.
The major concern, according to Bhargava, is that those who can afford small cars now find them expensive. 'Unless something changes, the domestic market will remain muted. In this current year, sales of small cars have declined by about 9%. If there is such a decline in the sales of cars that can be afforded by 88% of people earning, how can we expect growth?' he asked.
Indians bought 4.3 million cars during the last financial year—the highest ever in any fiscal, led by SUVs, but the overall growth remained muted compared to FY24. The growth is also expected to remain under pressure in the ongoing financial year amid domestic growth challenges.
Manufacturers expect car sales to grow 1%-2% this year, although some analysts expect growth to pick up by June or September.
According to market experts, the extended drop in domestic car sales is due to a combination of affordability constraints, fading pent-up demand post-COVID, and the high base effect from previous years—all of which have weighed on overall growth.
Analysts hope the income tax cuts introduced in the 2025 budget will provide some relief and boost domestic car sales.
While entry-level cars face continued setbacks, demand for SUVs continues to emerge as a top choice among millennials. Mahindra & Mahindra reported a nearly 28% jump in monthly sales in April, driven by strong demand for its XUV 3X0 and five-door Thar SUVs.
That helped the Scorpio maker overtake Hyundai and Tata Motors to claim the No. 2 spot in India's car market for the second time this year. With no sedans or hatchbacks in its lineup, the company has positioned itself entirely around SUVs and compact SUVs — a strategy that has delivered strong, sustained sales momentum.
Maruti Suzuki also reported a slight increase of 4.3% in UV (utility vehicle) sales in April.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
First Published: 2 May 2025, 01:40 PM IST
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