The market for entry-level hatchbacks in India has shrunk significantly over the past few years as rising prices have combined with relative economic distress to deter consumers in the ‘low-cost vehicle’ buying segment, while at the same time the market share of higher-priced cars has continued to climb on the back of ‘resilient incomes’ and lower sensitivity to price increases among ‘affluent buyers’, according to industry officials and automobile sector analysts.
Cars priced above ₹10 lakh, which fall in the premium segment, sold five times faster than those with lower sticker prices last fiscal, cornering about 30% of the passenger vehicle market, up from 24% in FY19, Crisil Research said in a note. During the last fiscal year ended March 2022, premium car sales grew 38% year-on-year, while sales of lower-priced cars rose by about 7%.
“The key reasons for this were a stark difference in income sentiment of the respective target consumers, a sharper rise in the prices of lower-end cars, fewer options (some manufacturers exited the segment), and a slew of new launches that have increased the preference for higher-priced cars,” Crisil Research observed.
