New Delhi, May 13 -- A slowdown in the country's information technology industry and startup economy has hit car sales in four key south Indian states, which together account for about 20% of the country's passenger vehicle market. Four of the five south Indian states-Karnataka, Tamil Nadu, Andhra Pradesh and Telangana-reported a 2.5%, 1.5% and 10.9% (AP+Telangana) decline in passenger vehicle sales, respectively, in FY25. Kerala, which accounts for 5% of total car sales in India, saw marginal 2% growth in PV sales in FY25, against 6.3% growth in FY24. Demand for passenger vehicles has declined year-on-year in the southern states for the past four quarters. Data from the Society of Indian Automobile Manufacturers Association (SIAM), compiled by Kotak Institutional Equities, said total sales in the five southern states, including Kerala, was at 1.08 million in FY25, down from 1.12 million in FY24. The fall in demand for passenger vehicles has hit the growth of top carmakers in the country, including Maruti Suzuki Ltd, Tata Motors Ltd and Hyundai Motor India Ltd. Analysts attributed the sales slowdown in the south to headwinds in the services sector. "Sales in the southern market are more urban-driven. The slowdown in urban demand and uncertainty in the job market amid global macro headwinds, particularly impacting the IT sector, is leading to cautious spending on discretionary items such as cars in the south," said Shruti Saboo, director, India Ratings & Research. Moreover, lower penetration of cars does provide much headroom for growth in northern states, said Preetesh Singh, specialist, CASE and alternate powertrains at Nomura Research Institute. "Macroeconomic factors like the slowdown in the services sector, particularly the IT sector and the startup economy, may also have played a role in slowing down sales in the south." Bengaluru, Hyderabad and Chennai are some of the top cities for the IT industry and startups. According to layoff tracker Layoffs.fyi, nearly 4,000 employees were let go from startups in south India during FY25. The industry has seen growth slow down, with IT giants Tata Consultancy Services Ltd and Tech Mahindra Ltd deferring their wage hikes. India saw sales of about 4.3 million passenger vehicles in FY25, just 2% more than the previous year. With one in four cars being sold in the southern states, the market weighs heavily on overall growth....