Prices of sub-Rs 5 Lakh cars jump 65% over last 5 years

Feb 7, 2024



New Delhi: Cars priced below Rs 5 lakh, highest price-sensitive segment Prices seen in four-wheeler market 65% bounce Over the past five years, SUVs have grown by 24% compared to luxury vehicles and sedans.
Arguably, the “no-frills” design of the entry-level cars meant they required more enhancements to comply with regulations.
“While the car prices The number of entry buyers has increased dramatically, has there been a corresponding increase in the income of potential buyers? The answer is 'no',” says Ravi Bhatia, president of research firm Jato Dynamics. “Not only have prices of new cars increased, but operating costs have also become higher, as petrol and maintenance, spares, tires etc. Have become. And labor charges have increased. The common man's dream of buying a new car has gone away, and he either compromises by buying an old, used car, or has to use his two-wheeler or public transport,” says Bhatia.
Shashank Srivastava, senior executive officer (sales and marketing), Maruti Suzuki, says that after Covid, disposable income for people in the lower income group has reduced, which has affected demand. However, he hastened to say that it is not just the phenomenon of high pricing that is keeping demand down in the Rs 5 lakh category. “Please remember that instead of choosing the base version, people are buying variants that offer more features on vehicles in terms of connectivity, safety, entertainment and design. They pay for SUV designs, larger infotainment screens, 360-degree cameras, , sunroofs, and connected vehicles, all of which have their own costs. Hence, we are seeing a structural shift in the market, with buyers more inclined towards higher-end versions due to the jump in their EMIs “
Tarun Garg, chief operating officer, Hyundai India, says there is not much to be said about the entry-level trend as it is “not a case where the common man is losing out”, rather it is a case where he has made the decision to upgrade. Have decided. For higher priced vehicles.
Perhaps this is why the share of cars priced above Rs 10 lakh has increased almost four times in the last eight years to 46%, from 12.5% ​​in 2015.
However, auto companies are also promoting higher priced cars as they come with bigger margins. Jato's Bhatia says, “Carmakers are clearly preferring to be in segments that offer higher margins, and thus moving out of lower-priced categories. Companies are far more profitable with expensive and loaded cars. Are.”



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