Sub-Rs 5 lakh cars make up just 0.3% of the market

The share of cars priced above Rs 10 lakh has reached 46% in the last 8 years.

The share of entry-level cars has been steadily declining over the past few years, as more and more people are opting for models that are high on frills like sunroofs and advanced safety tech. According to a report, the share of sub-Rs 5 lakh cars has dropped from 33.6% in 2015 to merely 0.3% in 2023.

Among the mainstream brands, Hyundai and Tata Motors have graduated to bigger or more feature-packed cars. Maruti Suzuki is the only brand that currently offers a true entry-level car in the form of the Alto and to an extent, Renault, with its Kwid.

Higher commodity prices and revised safety norms have also affected the prices of vehicles. The sub-Rs 5 lakh segment being the most price sensitive, prices have jumped by 65% over the last 5 years, while SUVs and luxury vehicles have seen a price rise of 24%.

According to Shashank Srivastava, Senior Executive Officer (Sales & Marketing) at Maruti Suzuki, post-Covid, disposable incomes of those in the lower income bracket may have shrunk, affecting demand.

“Please remember that people are buying variants that offer more features on vehicles in terms of connectivity, safety, entertainment and design instead of opting for base versions,” Srivastava said. “They are ready to pay for an SUV design, larger infotainment screen, 360-degree camera, sunroof and connected vehicle, all of which carry their costs. So we see a structural shift in the market with buyers more inclined to higher-end versions,” he added.

As a result, the share of cars priced above Rs 10 lakh has reached 46% in the last 8 years compared to just 12.5% in 2015.