Entry-level car buyers postponing purchases as COVID hit income sentiment: Crisil report

‘Premium car sales on the rise, reflecting resilient incomes of affluent buyers’

Customers aspiring to buy entry-level cars or those looking for an upgrade to such models are postponing decisions as the COVID-19 pandemic had hit their income sentiment significantly, rating agency Crisil said in a report on Monday.

At the same time, sales of premium segment cars were expected to go up on account of resilient incomes of affluent buyers, while the share of higher-priced two-wheelers is likely to remain about 40%, it added.

Cars priced above ₹10 lakh fall in the premium segment while two-wheelers costing ₹70,000 and above come in the higher prices category.

While supply-chain issues have affected a raft of vehicle manufacturers, counter-intuitively, models priced higher than the entry-level ones had continued to find buyers, the agency said.

In India, usually lower-priced cars are bought by first-time users or those upgrading from used vehicles.

Last fiscal, premium segment cars sold five times faster than those with lower sticker prices, and notched up about 38% year-on-year growth compared with about 7% growth for the latter, Crisil said.

Consequently, the market share of premium cars rose 500 basis points to about 30% last fiscal, compared with about 25% in FY21, it said.