Indian car buyers are gradually changing their purchasing preferences. Instead of focusing only on affordable vehicles, many customers are now willing to spend more on cars offering better features, technology and comfort. At the same time, alternatives such as CNG and electric vehicles are gaining popularity as buyers look for lower running costs.

According to Wheelwatch, an automobile sector report by Deloitte India, cars priced between ₹12 lakh and ₹20 lakh recorded the strongest sales growth in the second quarter of FY27. The report also highlights rising demand for SUVs, electric cars and CNG-powered vehicles.

Demand for Cars Priced Between ₹12 Lakh and ₹20 Lakh Rises

The Deloitte report indicates that sales of passenger vehicles in the ₹12 lakh to ₹20 lakh price bracket increased by 33.6% year-on-year during the second quarter of FY27. This category also recorded a 1.2 percentage-point increase in market share.

In comparison, sales of vehicles priced between ₹7 lakh and ₹12 lakh declined by 0.4%. This is significant because cars in this price category account for nearly half of the overall market.

The report also points towards stronger passenger vehicle demand following changes introduced under GST 2.0. Wholesale passenger vehicle sales increased by 30.7% to approximately 1.4 million units during the quarter, compared with 25.9% growth in the first quarter.

Small and compact SUVs also recorded strong growth, with sales increasing by approximately 31% and 53.1%, respectively. However, retail sales growth was comparatively lower at 22.2%.

CNG and Electric Cars Gain Ground Against Petrol Vehicles

Another important development highlighted in the report is the changing preference for vehicle fuel options.

The market share of petrol-powered cars declined by 2.8 percentage points to 42.6% during the second quarter of FY27. Meanwhile, electric vehicle registrations nearly doubled to around 97,000 units.

The market share of electric cars also increased from 6% in the first quarter to 6.7% in the second quarter.

CNG-powered vehicles witnessed considerable growth as well. Their registrations reportedly increased by nearly 50% year-on-year. CNG vehicles also gained popularity in states such as Gujarat, Haryana, Maharashtra and Rajasthan, where their sales reportedly surpassed those of petrol cars.

Lower running costs are one of the major reasons behind this growing demand. Some buyers are also expressing concerns about E20 fuel compatibility, which may be influencing their preference for alternative fuel options.

SUVs Continue to Dominate Changing Consumer Preferences

The growing popularity of SUVs is another major trend in India's automobile market.

Compact SUVs have strengthened their position, with their market share increasing by 3.3 percentage points. Improved technology, better interiors and additional features are allowing smaller SUVs to offer an increasingly premium ownership experience.

However, the market share of mid-size SUVs declined by 1.9 percentage points. The report suggests that some buyers are also considering pre-owned luxury vehicles instead of purchasing brand-new mid-size SUVs.

This indicates that customers are increasingly comparing features, comfort and brand value before making a purchase rather than choosing a vehicle based only on its price or size.

Dealer Inventory Levels Also Show an Increase

Despite strong wholesale sales, the difference between wholesale and retail demand remains an important concern for the automobile industry.

According to the report, dealer inventory levels stood at approximately 33–35 days at the end of July. By the end of September, this figure had increased to around 43–45 days.

Higher inventory levels indicate that vehicles are taking longer to move from dealerships to customers. If this trend continues, manufacturers and dealers may need to focus on managing stock levels and adjusting production according to actual demand.

What Do These Trends Say About India's Car Market?

The latest figures suggest that India's automobile market is moving towards a more diverse and feature-focused buying pattern.

Customers are increasingly considering vehicles in higher price brackets, while SUVs continue to attract strong demand. At the same time, CNG and electric vehicles are becoming more attractive alternatives to petrol-powered cars.

For automobile manufacturers, understanding these changing preferences will be important in deciding future product launches, pricing strategies and fuel options. The coming quarters will show whether these trends continue and how they reshape India's passenger vehicle market.