There are challenges in the entry-level segment

Rajesh Menon, director general, Society of Indian Automobile Manufacturers, talks to Rakshit Kumar about the impact of the new GST regime and the challenges facing the auto industry among other things. Edited excerpts

- Rakshit Kumar

Why has the growth of the passenger vehicle (PV) industry slowed down?

There was almost no production for some months during the pandemic, so it was obvious that the industry would show strong recovery on a low base post-2020-21. In the last financial year [2024-25], we saw growth of around 2%, but the number of units sold was 4.3mn, the highest ever wholesale.

We are seeing continued stress in the entry-level segment, while UVs [utility vehicles] are seeing very high demand. In fact, we are seeing 60%-plus share in the UV segment.

So clearly, there is strong urban demand for UVs, but there are challenges in the entry-level segment, which means there are challenges on affordability. Vehicle prices have gone up due to a series of regulations. People aspiring to buy at a particular price point are finding it unaffordable. This will get addressed in the new GST regime. The reform will bring renewed cheer to consumers and inject fresh momentum into the Indian automotive sector.

Are first-time buyers not coming into the entry-level market?

First-time buyers are finding it more difficult to purchase a vehicle because of unaffordability. Markets are price-sensitive. Having said that, There is also a strong pick up in the used-car market, which has shown good growth. The used-car market is projected to be about 6mn units this fiscal year compared to 4.3mn new cars in 2024-25.