Mint Explainer: Why urban India is spending less

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Subscribe to enjoy similar stories. Urban India’s shopping carts are losing their heft. After a pandemic-era spree on everything from electronics to grooming services, city dwellers are pulling back, leaving manufacturers and service providers grappling with sagging sales.

The slowdown contrasts sharply with rural households, which continue to spend on refrigerators, two-wheelers, and even cars, creating a tale of two economies within India. For businesses, the urban cool-off isn’t just a speed bump—it’s a recalibration of the post-pandemic boom, with implications stretching across sectors from automotives to fast-moving consumer goods (FMCG). Read this | Q2 results: How urban slump, input costs threw FMCG off gear At Maruti Suzuki India, the country’s largest carmaker, the slowdown is unmistakable.

Sales of its mini and compact passenger cars shrank in the September quarter of FY25 (Q2FY25), even as utility vehicles like the Grand Vitara and Fronx SUV found takers. To cushion the blow, Maruti offered an average discount of ₹29,300 per car in the second quarter. Yet, the share of mini and compact cars fell to 44.9% of total sales from 48.8% in the prior quarter, signalling a significant shift in buyer preferences.

Strengthening rural demand provided some solace, but urban stagnation is dragging overall growth. Festivals in October offered a temporary boost, with passenger vehicle and two-wheeler sales jumping. However, industry experts fear the rebound may not last through the year, with consumer sentiment remaining subdued.