Who in India can afford to buy a car? What is their income level? How does car ownership in India compare with other countries? And why is car sales growth slowing down in India? These are questions often raised by automobile enthusiasts and industry analysts alike.
According to R C Bhargava, chairman of Maruti Suzuki India Limited — the country’s largest car manufacturer — only about 12% of Indian households, with an annual income of more than ₹12 lakh, can afford to buy a car. This means that 88% of Indian families cannot afford even a small car.
Recent reports confirm that passenger vehicle sales in India have slowed down. In 2024–25, 4.3 million cars were sold, but the sale of small cars dropped by 9%. Economic slowdown, inflation, and job losses have all negatively affected car sales.
India has one of the lowest car ownership rates globally, with only 34 out of every 1,000 people owning a car. In comparison, approximately 185 out of every 1,000 people in China and about 832 in the US own a car. European countries have even higher ownership rates. The global average is 314 per 1,000 people.
While many Indian states have car ownership levels below the national average, Delhi stands out with over 100 car owners per 1,000 people. In Kerala, the figure is 52 per 1,000.
Bhargava points out that recent tax reliefs by the central government, coming at a time when average car prices have risen by ₹80,000 to ₹90,000, are not enough to boost car demand.
People have more pressing needs and priorities, he says. To make vehicles more affordable, he calls for tax cuts and industry-friendly policies.
This is a time of economic challenges. With the growing possibility of a global recession and increasing unrest along India’s borders, a significant rise in vehicle sales doesn’t seem likely in the near future.