Indian Auto Sector Records Lowest Annual Growth in Four Years

India's car sales by manufacturers to dealers grew 4.2% in 2024, their slowest pace in four years, industry data showed on Tuesday, as demand for new cars cooled off amid high inflation. Sales of passenger vehicles, which include small cars, sedans and sport utility vehicles (SUV), rose to a record 4.27 million units from January to December last year, compared to 4.11 million units in 2023, according to the Society of Indian Automobile Manufacturers, an industry body.

However, sales of small cars dipped 14.4% as their prices exceeded the income levels of their target customers, car manufacturers said. Sales of SUVs and large cars, on the other hand, grew 16.8% last year, albeit slower than the 22% jump they clocked in 2023.

Small cars comprise one-third of total car sales in India, while SUVs and other big cars form the rest. Manufacturers and dealers were forced to dish out higher discounts in the latter half of 2024.

Analysts expect car sales growth to pick up pace in 2025 on the back of new model launches that are expected to boost demand as well as expectations of an interest rate cut.