India's Car Market May Need a Policy Kickstart

Sales growth fizzling out could be a sign of premature saturation. A renewed EV push and the stimulus of greater import competition may help, but the problem looks larger than that

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India's market for passenger vehicles has slowed to a crawl. As reported, a forecast made by Indian carmakers at an internal meeting of the Society of Indian Automobile Manufacturers (SIAM) last week points to stagnant sales in 2024-25 at a level of just above 4.2 million units, with barely 1-2% growth expected in 2025-26.

While the market did recover from the pandemic and today's slowdown may yet turn out to be a blip, such weak offtake could also be a sign of premature saturation. In a country where only 34 cars are owned per 1,000 people, this would be a matter of alarm. The potential for growth, after all, ought to be immense. What we are seeing, though, is a scale-back of ambitions.