Car Sales In India Scale A New January Peak As Passenger Vehicle Demand Returns

Car sales in India rose to a new high for January as demand for hatchbacks returned in the world’s third-largest automotive market.

India’s carmakers dispatched 3.99 lakh units to dealerships last month, as against 3.93 lakh units in the year-ago period—a growth of 1.6% year-on-year, according to data released by industry body Society of Indian Automobile Manufacturers on Thursday. In comparison, retail sales—measured as vehicle registrations on the government’s VAHAN website—surged 15.53% to 4.65 lakh units.

That’s a reversal of a trend seen during most of 2024, when retail sales lagged behind wholesale, indicating a build-up of inventory. Dealers, as of 31 January 2025, had an unsold stock of 50-55 days as against a peak of 80-85 days in September 2024.

What’s boosted volumes is a revival in demand for small cars.

In January 2025, wholesale of hatchbacks and sedans grew for the second straight month, rising as much as 0.4% year-on-year to 1,27,065 units. Maruti Suzuki India Ltd., the market leader, shipped 97,256 of these. The production, however, declined 8.2% year-on-year, indicating that original equipment manufacturers are increasingly focusing on SUVs.

SIAM is hopeful of the demand sustaining at least in the near term.

“The recent budget announcing long-term economic growth, and particularly the personal income tax changes and reduction in interest rates by the RBI, would help boost consumer confidence and drive demand in the auto industry,” SIAM’s Director General Rajesh Menon said in a statement on Thursday.

Elsewhere, two-wheeler sales rose 2.1% year-on-year to 15.26 lakh units in January, while those of three-wheelers were higher by 7.7% at 58,167 units. A total of 19.35 lakh vehicles were sold last month. A further 4.62 lakh units were exported.