Sales Slip For European Carmakers In India: What’s Behind The Decline?

European mass-market carmakers Renault, Volkswagen, and Skoda are finding it increasingly difficult to expand their presence in the Indian automotive market, with all three witnessing stagnant or declining sales over the past three financial years, as per data from JATO Dynamics.

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Renault recorded the sharpest fall, dropping from 78,926 units sold in FY 2022-23 to just 37,900 units in FY 2024-25. Volkswagen’s numbers remained relatively flat, slipping slightly to 42,230 units in FY 2024-25 from 43,197 units the year before. Skoda fared a bit better, posting a minor increase to 44,866 units in FY 2024-25, though still down from 52,269 units two years ago.

JATO Dynamics India President Ravi G Bhatia attributes the lacklustre performance to a combination of strategic missteps and market challenges. “These brands initially focused heavily on sedans like the Vento, Rapid, and Scala, which limited their reach as SUVs gained massive traction,” he explained. In addition, slow product refresh cycles and limited dealer networks, especially in Tier 2 and Tier 3 cities, have further hampered growth.

India’s unique tax structure has also been a hurdle. Vehicles under 4 metres enjoy lower tax rates, favouring compact models typically offered by Japanese and Korean rivals. European brands, known for their larger vehicles, have struggled to offer cost-effective options in this segment.

Meanwhile, Indian brands like Tata and Mahindra, along with Maruti Suzuki, have surged ahead by localising production, launching products more frequently, and embracing CNG, hybrid, and electric powertrains early.

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However, Bhatia sees a possible turnaround. “Skoda’s recent launch of the Kylaq, a subcompact SUV designed for India, indicates a shift. Export focus and R&D localisation could help European players regain momentum,” he noted.

(With inputs from PTI)