ICRA noted that weak consumer sentiment, triggered by increased geopolitical tensions in northern India after the India-Pakistan conflict, dampened demand even as automakers continued to offer discounts.
26 Jun 2025 | 264 Views | By Arunima Pal
The Indian passenger vehicle (PV) industry witnessed a 13.6% contraction in retail sales in May 2025 compared to April 2025, with volumes dropping to 3,02,214 units from 3,49,939 units. According to ICRA, subdued consumer sentiment driven by heightened geopolitical tensions in northern India following the India-Pakistan conflict, impacted demand despite ...
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The Indian passenger vehicle (PV) industry witnessed a 13.6% contraction in retail sales in May 2025 compared to April 2025, with volumes dropping to 3,02,214 units from 3,49,939 units. According to ICRA, subdued consumer sentiment driven by heightened geopolitical tensions in northern India following the India-Pakistan conflict, impacted demand despite continued discounting by automakers. In contrast, the two-wheeler segment showed stronger performance, posting a 7% year-on-year growth in retail sales, supported by rural demand and a healthy harvest season.
Key Passenger Vehicle Trends
Wholesale PV volumes remained steady at 3.4 lakh units in May 2025. Inventory levels rose slightly to 52–53 days, as per the Federation of Automobile Dealers Association (FADA). SUVs retained their popularity and accounted for 64–65% of PV sales, with utility vehicles expected to remain key volume drivers. Export volumes increased 24% year-on-year, although restricted forex availability in African markets and inflationary pressure may pose risks. The availability of rare earth magnets—a critical EV component—also remains under watch due to restrictions imposed by China.
ICRA revised its wholesale PV growth projection for FY2026 to 1–4%, down from 4–7% earlier. This adjustment reflects ongoing concerns over inventory buildup, production constraints due to component shortages, and macroeconomic headwinds. However, steady new model launches are expected to offer some support to overall industry volumes.
Key Two-Wheeler Trends
The domestic two-wheeler industry reported wholesale volumes of 1.58 million units in May 2025, consistent with the previous month. Retail sales rose 7% year-on-year, driven by rural and semi-urban demand, auspicious wedding dates, and a strong rabi harvest.
Electric two-wheelers also showed sequential growth of 9%, reaching 1,00,266 units. Going forward, ICRA expects wholesale two-wheeler volumes to grow 6–9% in FY2026 on the back of replacement demand, potential urban recovery, and stable rural incomes, contingent on a normal monsoon.