Budget car segment loses market share as Indian buyers shift upmarket

The sub-Rs 10 lakh segment, once the backbone of India's automotive market, has seen its share of passenger vehicle sales plummet from 80 per cent in 2019 to 52 per cent in 2025, according to industry data. Despite this dramatic erosion, absolute sales volumes in this price band have remained largely flat during the period, even as the broader passenger vehicle market expanded by 54 per cent.

The divergence highlights a marked transformation in buyer behaviour, with Indian consumers increasingly gravitating toward mid-segment and premium vehicles. This trend reflects rising incomes, improved financing options, and changing lifestyle preferences among a growing middle class willing to invest in feature-rich and high-performance automobiles.

The shift is further evident in the used car market, where vehicles priced at Rs 10 lakh or below continue to dominate, accounting for approximately nine in every ten pre-owned vehicle sales. This suggests that while first-time and budget-conscious buyers still favour the sub-Rs 10 lakh segment in the secondary market, new car purchasers with greater purchasing power are opting for costlier alternatives.

Industry analysts suggest the trend is likely to persist as automobile manufacturers ramp up offerings in higher price brackets, potentially leading to further contraction in the budget segment's market share. The transformation underscores the evolving economic landscape in India's automotive sector, even as the budget vehicle category remains critical for addressing mobility needs across tier-2 and tier-3 cities and rural markets.