European mass-market carmakers Renault, Volkswagen, and Skoda continue to face challenges in expanding their footprint in India, with sales declining over the last three financial years, according to industry data released by JATO Dynamics.
Renault experienced the sharpest drop, with sales falling to 37,900 units in FY 2024–25 from 45,439 units in 2023–24, and 78,926 units in 2022–23. Skoda’s sales saw a slight year-on-year improvement to 44,866 units from 44,522 units, but still fell short of the 52,269 units sold in 2022–23. Volkswagen recorded 42,230 units sold in 2024–25, down from 43,197 units in the previous year, after selling 41,263 units in 2022–23.
“These brands have faced persistent headwinds in India despite their long presence,” said Ravi G Bhatia, President of JATO Dynamics India. He attributed the sluggish performance to an initial overemphasis on sedan models like Vento, Rapid, and Scala, while the Indian market shifted strongly toward SUVs. Additionally, the brands were slower in updating their product lines and have maintained limited sales and service networks, particularly outside metro cities.
Another key obstacle is India’s complex tax regime, which significantly benefits sub-4-meter vehicles. Compact petrol and diesel cars under this category are taxed at lower rates, typically 28% GST with 1–3% cess, while larger vehicles, especially SUVs, can attract up to 50% total tax, including cess. European manufacturers, known for larger vehicles, have struggled to deliver cost-effective models within these constraints.
By contrast, companies like Maruti Suzuki, Hyundai, Tata Motors, and Mahindra have captured greater market share through high localization, frequent new model launches, and a broader focus on alternative fuels, including CNG, hybrids, and battery electric vehicles. European brands have notably lagged in this space.
However, signs of strategic change are emerging. Skoda recently introduced the Kylaq, a subcompact SUV designed specifically for India. “There is a growing recognition that leveraging India for exports and R&D, while focusing on compact and cost-competitive vehicles, could be the way forward,” Bhatia said.
EV WORLD | Trump’s Tariffs to Raise U.S. Car Prices, Hurt EV Outlook
