Bengaluru, India, October 15, 2026: India’s first-time car buyers are moving towards more expensive, better-equipped vehicles, with younger customers increasingly prioritising safety, comfort, technology and long-term value over the lowest possible purchase price, according to Kotak Mahindra Prime Ltd.

The automotive finance company says buyers in their mid-20s and early 30s are now spending nearly twice as much on their first car as earlier generations. While the first car a decade ago typically cost between ₹1.5 lakh and ₹2.5 lakh, many young buyers today are entering the market with budgets of ₹5 lakh to ₹8 lakh, with some stretching further for compact SUVs and mid-segment vehicles.

The shift reflects changing aspirations, wider vehicle choices, growing confidence in pre-owned cars and the increasing role of vehicle financing in making higher-priced models accessible.

Young Indians Spending More on Their First Car

According to Kotak Prime, the first car is increasingly becoming a lifestyle and value-driven purchase rather than simply an affordable mobility solution.

Young buyers are evaluating vehicles based on a combination of safety equipment, cabin comfort, infotainment, connectivity, space, road presence and resale value. Their first car is also expected to serve multiple purposes, including daily office commutes, family travel, weekend outings and longer road trips.

Suraj Rajappan, Managing Director and CEO of Kotak Mahindra Prime Ltd., said younger customers were entering the car market earlier and looking for the best value they could afford within a comfortable monthly instalment.

“The first-car category has evolved, and this change is reshaping the wider auto market,” Rajappan said, highlighting the growing preference for larger vehicles and better-equipped variants.

He added that customers were increasingly using financing to balance their aspirations with affordability.

Compact SUVs and Feature-Rich Cars Gain Appeal

The growing availability of compact SUVs, feature-rich hatchbacks and better-equipped variants has expanded the choices available to first-time buyers.

Features such as advanced safety equipment, infotainment systems, connected-car technology and convenience features, which were once more closely associated with higher vehicle segments, are now influencing purchase decisions much earlier in a buyer’s ownership journey.

Rather than choosing the cheapest available model, younger customers are comparing space, safety, technology, resale prospects and monthly loan repayments before deciding which vehicle offers the best overall value.

This shift is also creating opportunities for automakers to attract younger customers towards higher-priced variants and segments at the beginning of their car ownership journey.

Pre-Owned Cars Help Buyers Move Up the Value Curve

The growth of organised used-car platforms is another factor influencing first-time car purchases in India.

Certified inspections, warranties, digital vehicle discovery and more transparent pricing have helped improve buyer confidence in the pre-owned market.

For some customers, a well-maintained used SUV or mid-size car can offer access to a higher vehicle segment at a monthly EMI comparable to that of an entry-level new car.

This allows buyers to consider vehicles with more space, comfort and features without necessarily increasing their monthly financial commitment substantially.

The availability of organised pre-owned options has therefore broadened the choices available to young buyers who want to move beyond entry-level cars.

Car Financing Plays a Bigger Role in Purchase Decisions

Financing is central to the changing first-car market, with Kotak Prime observing higher loan ticket sizes among first-time buyers and greater acceptance of longer repayment tenures.

The company has also noted growing comfort with loan tenures of five to seven years, alongside what it describes as strong repayment discipline among younger borrowers.

For many buyers, the monthly EMI has become the primary measure of affordability. Instead of focusing exclusively on the vehicle’s upfront price, customers are assessing whether the monthly repayment fits comfortably within their budgets.

This approach can make a more expensive vehicle or a higher segment appear attainable, provided the buyer is comfortable with the longer repayment commitment and overall cost of borrowing.

According to Rajappan, first-time buyers are increasingly willing to move up one or even two vehicle segments if they believe the additional expenditure will deliver better long-term value.

Changing Aspirations Reshape India’s Entry-Level Car Market

The trend reflects broader socio-economic changes, including evolving career opportunities, the growing prevalence of dual-income households and changing urban mobility requirements.

For younger Indians, a first car increasingly represents personal independence, financial progress and the ability to travel more comfortably with family and friends.

These expectations are influencing how buyers approach their first vehicle purchase, encouraging them to consider a wider range of models and financing options rather than limiting their search to the most affordable cars.

The observations shared by Kotak Prime point to an evolving first-car market in India, where value is increasingly defined by the combination of features, safety, usability and manageable monthly payments rather than purchase price alone.