Two Months Into 2025, Weak Demand Continues to Slam Brakes On Car Sales

Just before his passing, the patriarch vowed to launch upgrades of the Jimny, Ciaz and other models in India, “cars that will shake up the 4x4 and SUV segments”. Inspired, Team Suzuki began work on new models to bolster its market leader position. But the going has been rough.

It is not just Suzuki; every auto company is feeling the pinch.

Sales wheels have remained stuck in stockyards, gear shifts wobbly, gas pedals woozy and brake pads jammed on gleaming carbon discs. The layer of dust is noticeably thicker on over 8 lakh cars waiting for their first master. The furrow on the brow of salespersons is deep. The red on balance sheets is copious. There are new entrants on the block too — those with zero sales.

Haughty sales projections have come to nought, with Year 2025 failing to bring cheer to the flailing industry. Stuck in a knotty spiral of rising inventories and hefty discounts, dealers only see dark curves ahead.

The Secretariat studied Auto Punditz’ and other reports on companies selling 500 units or more, and dove deep into the sales hierarchy, to present a relevant and clearer picture.

It shows January 2025 car sales at 4,01,538 units, against 3,93,471 units a year back. Through the year, sales remained flat, no troughs or crests — 365 days of discounts and freebies to get vehicles out of stockyards, a never-ending grind for salespersons and auto firms. No heady growth, no New Year comeback, no happy days in the foreseeable future. February was equally depressing.

Auto Industry In Deep Trouble

In Individual terms too, the trend was disturbing. Citroen is all but dead, despite the Basalt. Honda Amaze isn’t doing well, despite a new launch. Thar Roxx is barely outselling the smaller, three-door Thar. Except for its Windsor EV, its all but blushes for MG when asked about other models. Tata’s Curvv coupe is seeing dull sales, despite the hype. Jeep is at the bottom, despite some really good SUVs.

Some of the mighty have fallen too. Honda, with its once-famous City, is close to the bottom, perhaps because even the new facelift shows only marginal upgrades, despite a generation change and price hikes. At Tata Motors, not just the Curvv, even Altroz has seen a steady decline. The Curvv has a ‘coupe excuse’ to lean on, the Altroz’s non-performance is difficult to explain.

Renault and Nissan are in free fall. The former is investing heavily on dealers, but not so much on its cars. Nissan, still smarting after its non-starter merger with Honda in Japan, has just two bullets in its armoury, and India’s young or old guns are not finding the firepower or recoil too enticing.

Suzuki’s Jimny remains a non-galloper, except in the higher Himalayas in the middle of India’s snow-heavy winter this year. Skoda’s Superb has not even opened its 2025 sales account, while the Kushaq and Kodiaq are selling just enough to pay for the coffee in showrooms. Though, the Kylaq may save Skoda’s day. Parent company Volkswagen is facing a similar sales boomerang with the Taigun and Tiguan.

Why Can’t The Sector Shake The Lethargy?

The big reasons are tighter buyer purse-strings and hyper-optimistic over-projections (and, therefore, over-production) at auto firms. Automakers were wooed by a fantasy ‘demand pipe’, convinced that if they built cars, India would buy them. India didn’t. Instead, people began cutting back on expenditure as incomes stagnated and earnings fell short of inflation. RBI statistics and statements note this too.

The lead-up to today’s standstill traffic jams at stockyards began a few years back. The Household Consumption Expenditure Survey 2022-23 itself reveals this. “Real income growth is at a 40-year low, with headline inflation continuing to hurt households. RBI has scaled down real GDP projections. The impact of lower earnings could lead to further reining in of growth,” the survey said three years back.

Automakers chose to disregard this, believing in the magic of ever-swelling sales. When aspirational expenditure (car sales) flagged, firms and dealers were caught unawares. Harshit Kumar, salesperson at VW, says: “We placed too many orders for too many variants. Most are still in stockyards. Even with discounts, stocks are not moving.” Not surprisingly, Harshit has moved — to a new job, with a VW rival.

A counterpart at Hyundai Motors chose to remain unnamed: “Our overall numbers are good, but are driven by a few models like Creta and Venue. Others like Verna, Tucson, Alcazar and IONIQ 5 are not moving well.”

This predicament reflects precisely what is happening at Suzuki India, Mahindra, Toyota and Tata as well — just a few models are selling and saving the blushes.

There Are Silver Linings, But Question Marks Too

Toyota continues to live true to its moniker of ‘indestructible’, with Fortuner and Innova being strong as ever, and Hycross and Hyrider doing well too. Ford marks its return to India with the launch of the Endeavour, but this SUV is priced mightily at over Rs 50 lakh, pitting it directly against the Fortuner. Hyundai’s forthcoming Santa Fe, Stargazer and Palisade will heat things up even more.

In another vein, the automaker that gave India its ‘people’s car’ continues to crush competition with Suzuki’s Swift and WagonR. There is a ticklish vignette here — despite all the hyper-technology in today’s automobiles, two cars launched decades back are still calling the shots. Suzuki seems to have mastered what others have not; how to retain customers.

That is critical for every automaker, to mollycoddle the customer and retain them without much fuss or freebies. There are other life-threatening dangers in the making too. EVs are gaining traction, while diesel still holds the grunt to hold sway in the SUV space.

What works for ICE (internal combustion engines) is that owning an EV in India is still like having a unicorn for a pet. It may be cool, but what and where do you feed it? A dependable nationwide charging infrastructure is some distance away.

Also, an over-arching issue is confronting us and impacting all sectors, especially auto — affordability. Even the CMIE (Centre for Monitoring Indian Economy) has admitted that basic expenses have been outpacing income growth in the country, making luxury spending take a backseat.

Unemployment or salary stagnation is a brutish reality, one that makes new car purchases take a very distant back-seat.

(The writer is a veteran journalist and communications specialist. Views are personal)