India's Automotive Sector Shows Mixed Performance in May 2025 with Selective Recovery

India's automotive industry displayed mixed performance in May 2025, with passenger vehicle domestic wholesale volumes moderating while other segments showed signs of recovery, according to a BNP Paribas Exane research report released on June 3, 2025.

The passenger vehicle segment experienced a slowdown in domestic wholesale growth during May, though utility vehicle manufacturers continued to report healthy expansion. Two-wheeler domestic wholesale growth improved and aligned with retail trends observed in the market. Commercial vehicle dispatches remained flat year-over-year, but medium and heavy commercial vehicles showed month-on-month improvement.

Two-wheeler exports maintained double-digit growth, supported by original equipment manufacturers expanding into new geographical regions. The tractor segment demonstrated robust growth of 7.7 percent year-over-year, with Mahindra & Mahindra leading the expansion.

Industry-wide domestic wholesale volume growth for May 2025 showed two-wheelers advancing 2 percent, while passenger vehicles, commercial vehicles, and three-wheelers remained flat compared to the previous year. Tractors recorded the strongest performance with 7.7 percent growth.

Retail volume data based on vehicle registrations indicated two-wheelers growing 7 percent year-over-year, while passenger vehicles declined 3 percent during the same period.

Market share dynamics revealed shifts among major manufacturers. In the passenger vehicle segment, Maruti Suzuki, Tata Motors, and Hyundai lost market share year-over-year, while Mahindra & Mahindra, Kia, and Toyota gained ground. The two-wheeler segment, excluding Honda, saw TVS Motor and Royal Enfield increase their domestic volume market share, while Hero MotoCorp and Bajaj Auto likely experienced losses.

Several lateral indicators provided mixed signals about the broader economic environment. BNP Paribas's proprietary commodity cost index remained flat month-on-month for both passenger vehicles and two-wheelers in May 2025. Steel prices increased sequentially but were offset by favorable movements in base metal prices.

Transportation activity showed positive momentum, with diesel demand and freight rates both increasing, suggesting improved movement of goods that could support medium and heavy commercial vehicle demand recovery.

The automotive industry serves as a key indicator of economic health in India, representing a significant portion of manufacturing activity and employment. The sector has faced various challenges in recent years, including supply chain disruptions, raw material cost fluctuations, and changing consumer preferences toward electric vehicles.

Currency circulation growth improved in April 2025, which analysts view as a positive indicator for two-wheeler demand, as this segment is particularly sensitive to rural economic conditions and cash availability.

The report noted that reservoir levels fell near the last 10-year mean in May 2025, while rural wages continued to show year-over-year growth in February 2025, the latest period for which data was available.

Vehicle loan growth remained steady year-over-year in March 2025, indicating continued access to financing for automotive purchases across different vehicle categories.

The findings suggest that while some automotive segments are showing resilience and growth, the overall sector continues to face mixed demand patterns that reflect broader economic conditions and consumer behavior changes in India's diverse market.