A gradual climb for LVs sales in India, projected to grow 3.7% in 2025

According to S&P Global Mobility, growth for 2024 is projected to be even lower at 2.9%

Sales growth of light vehicles (LVs) in India is expected to grow by only 3.7 per cent in 2025 over the projections for 2024, according to S&P Global Mobility, a trend recently endorsed by R C Bhargava, chairman of the largest carmaker in the country, Maruti Suzuki. 

For 2024, the growth is projected to be even lower at 2.9 per cent (between January and September, it was 2.7 per cent) after a heady growth in the past few years, especially post-pandemic. In CY23, the market grew by more than 7.3 per cent.   

LVs, apart from passenger vehicles, also include light commercial vehicles under 6 tonnes in S&P’s calculation. 

Bhargava had said that with pent-up demand now over, he sees passenger car growth not exceeding 3-4 per cent in the next few years until demand at the lower end of the market, which is shrinking, picks up. 

However, India’s sales growth will be higher than the global average, which, according to S&P, is projected to grow by 2.7 per cent, with the number of vehicles increasing from 88 million in 2024 to 90.4 million in 2025. India’s growth, however, will be slower than in many countries like Japan (4.9 per cent) and the Association of Southeast Asian Nations (4.4 per cent). This is because these countries will recover from pandemic-level sales only in 2025 after being in the negative in 2024. 

The slower growth in India in 2025, according to S&P, is due to the huge increase in sales growth — 34 per cent in 2024 over pre-pandemic levels of 2019, the highest for any country in the world by miles.

 

In China, it was 4.5 per cent, while countries like the US, Japan, South Korea, the UK, and Brazil were below their pre-pandemic levels. With a high base of car sales resulting from this substantial growth, slower growth and more consolidation in the Indian industry are expected. 

Yet, despite the slowing down of growth, S&P shows that India will continue to grow while many other key markets will contract in the next decade. For instance, the US, the second-largest car market in the world, may see sales of LVs fall from 16.5 million in 2025 to 15.9 million in 2035. But India will continue its growth trajectory, with sales projected to increase from 5.2 million in 2025 to 8.3 million in 2035, making it the third-largest market in the world.

 

Even Japan is expected to see a fall from 4.8 million vehicles in 2025 to 4.2 million vehicles in 2035. 

What is interesting for India is that LV penetration is still low compared to other countries, with room for growth. For instance, it was only 36 per 1,000 households in 2022 but is expected to hit 64 by 2032. In contrast, in China, it was 185, which is projected to rise to 285 in the same period.