The Indian Light Vehicle (LV) market set a new record for the third consecutive year in 2024 after having been impacted by the pandemic in 2020-21. Demonstrating resilience in the face of numerous headwinds, including elevated interest rates, a depreciating rupee that contributed to higher vehicle prices, extreme weather conditions such as heatwaves and uneven monsoons, and elections at both the central and state levels, the market remained robust.
Total LV wholesales reached an unprecedented 4.9 million units, reflecting a year-on-year (YoY) growth rate of 3.8%. Passenger Vehicle (PV) sales increased by 5% YoY to 4.2 million units, while total volumes for Light Commercial Vehicles (LCVs) with a gross vehicle weight of up to 6T slipped by 1% YoY to 691k units.
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In terms of segments, the performance was mixed. The primary driver of the market was the strong demand for SUVs, particularly newer and higher-end models, which often had extended waiting periods. In contrast, sales of less expensive entry-level models and older SUVs lagged, as their potential buyers increasingly opted for more affordable used vehicles.
Following the peak of the country’s festive season in October, automakers once again reduced wholesales in December to address the elevated inventory levels at dealerships. Consequently, total LV volumes in December fell by 8% month-on-month (MoM) to 368k units. However, this figure still represented an increase of 10% YoY. The December selling rate stood at 4.9 million units/year, down by nearly 6% from the exceptionally strong November result. Nonetheless, December’s rate was still robust.
Similarly, retail sales of PVs and LCVs declined to 333k units in December, down from 369k units in November, according to data from the Federation of Automobile Dealers Associations (FADA). PV retail sales dropped by 9% MoM, while LCV sales fell by 16% MoM. However, for full-year 2024, retail sales of PVs and LCVs increased by 4.4%.
In addition to the reduction in wholesales, aggressive discounts and incentives played a role in clearing stocks. FADA reported that the days’ supply decreased to 55-60 days at the end of December 2024, compared to 65-68 days in November, 75-80 days in October, and a peak of 80-85 days in September.
Preliminary data for January 2025 indicates a rebound in PV wholesales, with each of the top five automakers posting improved figures. The most significant MoM growths were observed by Suzuki Group, Hyundai, and Tata Motors.
Our forecast for LV sales remains unchanged, with volumes in 2025 expected to reach just below 5 million units (+2% YoY). We have maintained a cautious stance, as the potential implications of the “Trump 2.0” policy on global trade and the economy could be significant. While India may not be a direct target of the US’s protectionist trade policy, it could experience indirect effects, such as heightened inflation in the global economy.
The continued weakness of the rupee is another area of concern. Nevertheless, the Reserve Bank of India has recently reduced the interest rate from 6.5% to 6.25%, marking the first rate cut in five years. This reduction may result in lower financing costs for vehicles. Furthermore, the Union Budget 2025-26 has introduced tax reliefs for the middle class. This too could potentially encourage undecided vehicle buyers to proceed with their purchase decisions in the coming months.
We have also maintained our long-term sales outlook for India, as global uncertainty and economic slowdown are likely to impact the expansion of the middle class, the primary demographic able to afford new vehicles. The government’s effectiveness in addressing structural issues will be a critical factor in sustaining economic growth.
This article was first published on GlobalData’s dedicated research platform, the Automotive Intelligence Center.
