India’s PV Sales Hit a Speed Bump in June Amid Demand Fatigue

India’s passenger vehicle (PV) sector, which opened 2025 with record-breaking sales, is now beginning to exhibit early symptoms of a cyclical downturn.
The sustained SUV demand that propelled the market to an all-time high of over 400,000 units in January appears to be subsiding. June volumes are projected to recede to the 325,000–335,000 range. Industry insiders attribute this cooling to reduced consumer appetite, especially among first-time buyers, and inventory pileups across retail channels.

Autocar Professional learns this deceleration may lead to a marginal decline of 1–2% year-on-year (YoY) in dispatches, breaking an eight-month streak of uninterrupted growth. Should volumes land at the lower end of the forecast, it would imply a sequential drop of roughly 5,000 units from June 2024, adding pressure on manufacturers that have witnessed a prolonged volume challenge.

From January through May 2025, total PV dispatches by Indian manufacturers reached approximately 1.87 million units, averaging nearly 375,000 monthly. January alone contributed a record-setting 403,100 units. June, however, is shaping up to be the lowest-performing month, bringing the half-year cumulative total to around 2.2 million units. Despite this moderation, the industry remains on track to log a modest 2% YoY growth over the first half of 2025.

The latest market trends indicate that industry growth is supported primarily by a few outperforming manufacturers. Mahindra & Mahindra (M&M) and Toyota Kirloskar Motor are projected to report strong year-on-year growth in June, with M&M likely to post a 17% increase in dispatches. In contrast, Maruti Suzuki, the country’s largest carmaker, is expected to record a marginal volume decline, reflecting varying performance levels across original equipment manufacturers (OEMs).

Once a top contender, Tata Motors is projected to see a deceleration in sales. This could allow Hyundai Motor India to solidify its position as the third-largest player by monthly volume. The difference in output between Hyundai and Tata is expected to grow to around 5,000 units.

Mahindra & Mahindra continues distinguishing itself as the segment’s most dynamic performer. The company is expected to dispatch between 47,000 and 48,000 units in June, translating to an impressive 17% YoY increase. In May, M&M captured a record 15% market share—a figure expected to inch higher. The company’s consistency now places it firmly as the second-largest PV manufacturer in India, trailing only Maruti Suzuki.

An executive from a prominent automotive OEM remarked that underlying retail sentiment has been subdued in recent weeks, even with the lure of substantial discounts. This lack of traction has contributed to a 5% YoY decline in retail sales for June thus far. Compounding the situation is a growing stockpile of unsold inventory at dealerships.

A significant headwind has emerged in supply chain constraints, particularly regarding rare earth magnets. These materials, essential for manufacturing various components, are now in short supply. While electric vehicles (EVs) are currently the most affected, conventional internal combustion engine (ICE) vehicles may soon face similar challenges. Rare earth magnets are integral to numerous systems, including e-axles, braking and oxygen sensors, steering assemblies, speedometers, and infotainment equipment.

However, macroeconomic fundamentals offer cause for cautious optimism in the medium term. A confluence of supportive factors—such as a recent reduction in interest rates, decelerating inflation, and revisions to income tax slabs—is expected to revive consumer confidence gradually. Industry experts believe this could maintain a 4–5% growth for FY2025. As such, the second half of the fiscal year (2HFY25) is expected to mark the onset of a meaningful recovery.

Maruti Suzuki is projected to dispatch around 125,000 units in June, reaffirming its leadership despite its muted growth trajectory. However, a troubling divergence between wholesale dispatch figures and retail demand is becoming increasingly evident. Current inventory levels, as estimated by industry trackers, now hover between 50 and 53 days, well above industry norms.

Automakers are intensifying their use of cash and value-added promotional incentives to manage this inventory surplus. This is particularly evident in the hatchback segments, where per-unit discounts range from Rs 20,000 to Rs 45,000. In the SUV category—the key growth engine in recent years—discounts have also climbed sharply, reaching Rs 50,000 depending on the model.

While these discounting strategies may offer short-term relief by moving inventory, they compress profit margins and add financial strain to already stretched OEM balance sheets. The ongoing sales dip is also exacerbated by several macroeconomic pressures: persistent inflation, higher borrowing costs, and elongated vehicle replacement cycles.

Another factor weighing on market performance is the absence of compelling new launches, particularly in urban regions where demand saturation appears to be setting in. Without a pipeline of fresh, aspirational offerings, customer engagement remains tepid.

To navigate this challenging landscape, automakers must undertake a strategic reset. This includes strengthening their product value propositions, accelerating the cadence of new model introductions, and deploying innovative financial solutions to make ownership more attractive. The second half of 2025, which coincides with the festive season, will be instrumental in determining the market's trajectory.

Anticipated product launches during this period may catalyze renewed momentum.
Despite a cumulative rise in volumes, India’s PV sector is grappling with multiple structural pressures, including demand-side fragility, inventory excesses, input bottlenecks, and eroding margins. While M&M and Toyota are shouldering the growth burden primarily, their contributions alone may not counterbalance the underperformance of other leading players in the country's top five carmakers.
Unless consumer sentiment rebounds resolutely or a slate of compelling new products reinvigorates market appetite, the sector risks facing continued turbulence throughout the year.