Sales of small cars in India have declined, a trend the Congress party attributes to an economic slowdown and stagnant incomes. They argue that car purchases are now limited to a small percentage of affluent families, leading to the downturn in small car sales.
Sport Utility Vehicle: While sales of small cars have declined in India over the past few years, SUV sales have surged. This shift reflects changing market preferences and alterations in consumer spending power. Previously, small hatchbacks were preferred; however, there is now a growing inclination towards SUVs. Economic slowdown, reduced incomes, and other factors are contributing to this decline.
Decline in Small Car Sales: What are the Reasons?
Small and affordable vehicles, especially hatchbacks, were once highly popular in India. However, sales of SUVs and larger cars are now increasing. The primary reason is evolving consumer preferences and lifestyle changes. Small car sales have dropped by as much as 9 percent, with the economic slowdown and income stagnation cited as major contributing factors.
Senior Congress leader Jairam Ramesh expressed concern over this issue. He stated that “most people's incomes are not increasing, making them unable to afford expensive items like cars.” He cited Maruti Suzuki India chairman R.C. Bhargava's statement that only 12% of Indian families can afford to buy a car, while the remaining 88% cannot even afford a small car.
Changes in Car Sales Trends
According to Congress leader Jairam Ramesh, passenger vehicle sales increased by only 2% between 2023-24 and 2024-25. This growth rate is expected to continue in the coming years. He attributed this to stagnant incomes over the past few years, hindering consumer spending on cars and other goods.
Congress's Appeal to the Government
The Congress party urged the government to address this concerning situation by taking necessary steps to mitigate the economic slowdown. Jairam Ramesh stated, "Until people's incomes improve, they cannot afford expensive items like cars. The government should focus on this and take steps to increase incomes."
Congress believes that if the government takes concrete steps to boost incomes, people will be able to purchase not only cars but also other consumer goods. This would accelerate the national economy and improve consumer spending patterns.
What Measures Should Be Taken?
The Congress party also urged the government to consider policies that promote job creation, enabling more people to earn stable incomes. Furthermore, the government should plan tax breaks for the middle class and increase credit facilities, allowing them to purchase essential goods in addition to larger vehicles.
Jairam Ramesh also suggested that the government should formulate a special economic package for lower and middle-class individuals to help them manage their expenses and participate in consumer goods purchases. This would benefit not only the automobile industry but also strengthen the overall national economy.
The decline in small car sales is not attributable to a single cause but is a result of several factors. Income stagnation and lifestyle changes are the most significant contributors. If the government addresses this issue and takes concrete steps to improve people's incomes, the situation may improve, leading to increased sales of cars and other consumer goods.
