European Auto Brands Struggle with Sales in India: A Closer Look

European automobile manufacturers are facing significant challenges in the Indian market, with brands like Renault, Skoda, and Volkswagen reporting declining sales figures. Despite efforts to create models tailored for Indian consumers, the sales numbers have not improved significantly. The focus on sedans has limited their engagement with the growing SUV segment, and the current tax structure poses additional hurdles. This article delves into the sales figures, market insights, and future prospects for these brands in India, raising questions about their strategies moving forward.

By Narendra Chaudhary Jun 23, 2025, 11:17 IST

Challenges Faced by European Auto Manufacturers

European automobile manufacturers have consistently encountered significant challenges in boosting their sales figures. In recent years, these brands have aimed to create models tailored specifically for the Indian market to enhance their appeal. However, despite these efforts, the sales statistics have shown only modest improvements. According to the latest data from JATO Dynamics, companies like Renault, Skoda, and Volkswagen have reported declining sales in recent times.

Sales Figures Overview

The data from JATO Dynamics indicates that Renault experienced the most substantial drop in sales, with figures falling to 37,900 units in 2024-25, down from 45,439 units in 2023-24. In contrast, Renault had managed to sell approximately 78,926 units in 2022-23.

Skoda's sales figures for 2024-25 were around 44,866 units, which is a slight increase from 44,522 units in the previous year. However, this is concerning as the brand had sold up to 52,269 units in 2022-23.

Volkswagen's sales reached about 42,230 units in 2024-25, a decrease from 43,197 units in 2023-24. In the previous year, Volkswagen had recorded sales of around 41,263 units.

Market Insights

Insights from JATO Dynamics, as explained by the India President, Ravi G Bhatia, suggest that these brands' initial focus on sedans has contributed to their sluggish sales. This concentration on sedans has limited their engagement with the rapidly growing SUV market.

The report further elaborated that these manufacturers have been slow to refresh their vehicle lineups, which has hindered their market reach. Additionally, their sales in tier 2 and tier 3 cities have been restricted due to low market penetration. The Indian tax structure, which favors sub-4 meter vehicles with lower taxes, has also posed challenges for these brands.

Impact of Tax Structure

The current tax regime imposes a 28% GST and a 1% compensation cess on passenger vehicles (petrol, CNG, and LPG) that are up to 4 meters in length and have an engine capacity of 1200CC. Diesel vehicles of similar dimensions and engine size are subject to a 28% GST and a 3% compensation cess.

Vehicles exceeding 4 meters in length and 1500CC engine capacity attract a 28% GST and a 17% cess. SUVs longer than 4 meters with engines above 1500CC and a ground clearance of more than 170mm incur a 28% GST and a 22% compensation cess. While European brands have struggled with localization, competitors like Tata, Mahindra, and Suzuki have successfully captured market share through frequent launches and early adoption of alternative fuel technologies, including CNG, hybrid, and battery electric vehicles (BEVs).

Future Prospects

The report also highlighted that European brands might consider utilizing the Indian market for research and development as well as for export purposes.