Domestic Auto Sales Slipped, but Exports Gained, in June Quarter, Says SIAM

Mumbai, July 15, 2025 – India’s auto sector opened FY26 on a mixed note, with domestic sales slipping but exports registering record gains, according to data released by the Society of Indian Automobile Manufacturers (SIAM). Passenger vehicles and two-wheelers saw a downturn, while export volumes touched new highs, offering a silver lining amid an otherwise cautious quarter.

The sales decline was largely attributed by SIAM to weaker consumer demand in the latter half of the quarter, supply-chain bottlenecks, and policy-linked challenges such as export licensing on rare earth magnets. Still, export performance was bolstered by stronger demand from international markets and trade advantages under newer free trade agreements.

Passenger Vehicle Sales Dip Marginally in Q1 FY26

Domestic sales of passenger vehicles fell 1.4 percent to 10,11,882 units during April-June 2025, compared to 10,26,006 units in the same period last year. Despite the decline, this marks the second consecutive year where PV sales have crossed the 1-million mark in the first quarter.

SIAM attributed the drop to slower sales in the latter half of the quarter. “Passenger vehicle sales in Q1 of 2025-26 de-grew by (-)1.4 percent. However, this is the second time Q1 sales have crossed the 1 million mark,” said Rajesh Menon, Director General at SIAM.

Utility Vehicles Outperform Passenger Cars

Within the PV segment, utility vehicles (UVs) remained the growth engine, expanding by 3.8 percent year-on-year and now accounting for 66 percent of total PV sales. In contrast, the passenger car segment contracted by 11.2 percent compared to Q1 FY25.

Two-Wheeler and CV Sales See a Decline

Two-wheeler sales declined 6.2 percent to 46,74,562 units in Q1 FY26, down from 49,85,631 units in the year-ago period. Commercial vehicle (CV) sales also recorded a slight decline of 0.6 percent, with volumes slipping to 2,23,215 units from 2,24,575 units.

Three-Wheelers Show Stable Growth

The three-wheeler segment remained flat, inching up 0.1 percent to 1,65,081 units, making it the highest-ever Q1 sales in the segment.

Passenger Vehicle Exports Surge 13.2 Percent

A key highlight for the quarter was the strong export performance of passenger vehicles. India exported 2.04 lakh PV units, a 13.2 percent increase over Q1 FY25 – the highest ever for any Q1 period, SIAM noted.

The growth in exports was supported by robust demand in the Middle East, Latin America, Sri Lanka, Nepal, and Japan, along with gains from free trade agreements (FTAs), particularly with Australia.

Supply-Side Challenges Persist

However, the sector continues to grapple with supply-chain issues. SIAM flagged concerns over the export licensing requirements from China on rare earth magnets, which has emerged as a bottleneck for original equipment manufacturers (OEMs) across categories.

As the auto sector enters the second quarter, the focus will be on whether demand can recover during the festive months while navigating ongoing global and domestic challenges.

Outlook: Cautious Optimism Ahead of Festive Season

Despite flat performance in Q1, industry players remain cautiously optimistic for the remainder of the fiscal year.

The industry is also hopeful that above-normal monsoons will drive rural income recovery, benefiting the two-wheeler and entry-level car segments. Additionally, the 100 basis points repo rate cuts over the past six months are expected to gradually ease borrowing costs, enhancing affordability.

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