Broad-based recovery led by 2Ws; PVs lag on weak sentiment
The Indian auto sector posted a healthy performance in May 2025, with wholesale volumes rising by 9.8% YoY, indicating a broad-based recovery across most vehicle segments. The growth was primarily driven by 2-wheelers (2Ws), which outpaced other categories, benefiting from sustained demand in both rural and urban markets. Passenger vehicles (PVs), however, remained the relative laggard, impacted by subdued consumer sentiment and a high base effect from the previous year. Retail activity remained stable, supported by favourable seasonality such as the wedding season and post-harvest spending, with no disruptions from last year’s anomalies like extreme heat or election-related uncertainties. In the Commercial Vehicles (CVs) segment, volumes showed a modest uptick, helped by an improvement in infrastructure activity and a revival in public capex, especially evident from Q4FY25 onwards.
Retail activity, however, reflected a more measured story. As per Vahan data, total vehicle registrations declined ~4% YoY to 2.03 million units. The PV segment led the drop, with registrations down 8.6% YoY, reflecting weak consumer sentiment and higher financing costs. 2Ws volumes grew 3.3%, while 3Ws remained flat. The EV segment remained a bright spot, posting 16.1% YoY growth, buoyed by expanding product portfolios and competitive intensity, particularly in 2Ws.
Looking ahead, monsoon trends will be a critical monitorable to gauge rural demand sustainability. A key concern emerging across OEMs, particularly in the Electric Vehicle (EV) space, is the growing pressure on rare earth metal (REM) supplies. This follows China’s recent export restrictions, which have begun affecting supply chains and causing delays in sourcing critical EV components. Current inventories are expected to last 6–8 weeks, potentially impacting EV production if supply constraints persist.
Passenger Vehicles
In May 2025, domestic PV dispatches came in at 230k units, down 1.7% YoY but up 2.7% MoM, while exports rose sharply by 81.2% YoY to 34.1k units, as OEMs increasingly pivot toward global markets amid domestic uncertainty. SUVs remained the key driver in the PV segment, though a softening trend was visible on a sequential basis across several manufacturers. Maruti Suzuki saw a 3% increase in total volumes, though domestic sales declined 5.6% YoY to 136k units, impacted by weakness in entry-level offerings and a moderation in SUV sales. The company attributed the decline to a deliberate calibration of dealer supplies, reduced demand for older SUV models, and broader market softness. Inventory levels stood at 35 days. Tata Motors remained the laggard, with total dispatches at 42.1k units, down 10.7% YoY and 7.7% MoM. While EV sales posted marginal growth, it wasn’t sufficient to offset declines in the wider PV portfolio. The company’s EV market share dropped to 36%, from 61% in April 2025, highlighting rising competition in the EV space. In contrast, Mahindra & Mahindra (M&M) led the pack, reporting domestic volumes of 52.4k units, a 21.3% YoY and 0.2% MoM rise. Strong performance across both ICE and EV portfolios, aided by new launches such as the BE 6 and XEV 9e, helped drive momentum and support rising EV market share. Hyundai reported total sales of 58.7k units, including 43.8k units sold domestically and 14.8k units exported. The company’s performance was impacted by a planned maintenance shutdown at its Chennai facility, which serves as its main production base in India. A common trend across OEMs has been a realignment of production priorities toward exports, as domestic demand remains subdued and competitive pressures intensify, particularly in the EV segment.
Two Wheelers
2W sales remained steady in May 2025, supported by seasonal wedding demand, post-harvest rural momentum, and stable sentiment across key markets. Hero MotoCorp (HMCL) dispatched 5.08 lakh units, recovering from April’s production hiccups. While domestic performance held firm, growth remains constrained by rising competitive pressure from Honda. On the international front, Hero saw notable traction in Bangladesh and Colombia, though global volumes remain modest. Retail registrations were strong at ~5 lakh units, as per VAHAN data. Bajaj Auto reported 3.84 lakh units, reflecting an 8% YoY increase led by a 22% surge in exports. Domestic volumes remained flat, indicating lingering demand softness. Despite muted April-May domestic trends, exports continue to act as a performance buffer. Royal Enfield recorded 89.4k units, with stable domestic volumes and a monthly pickup in exports, which increased by 3,052 units over April, indicating improving overseas traction. TVS Motor posted a robust 17% YoY growth, driven by broad-based strength across segments. Exports rose 22%, and the company made significant inroads in the EV space. TVS secured the #1 position in electric two-wheelers for the first time, selling 19.74k iQube scooters, just ahead of Ola Electric (19.71k units). This marked a 154% YoY growth from 7.76k units in May 2024.
Commercial Vehicles
The CV segment showed signs of recovery in May 2025, though trends remained mixed across subcategories and OEMs. Ashok Leyland recorded a 15% MoM growth, with sales rising to 15.5k units, driven by a strong rebound in the M&HCV segment after April’s slowdown. Tata Motors, however, saw continued pressure, posting total CV sales of 25.9k units, down 9.1% YoY. Weakness was most pronounced in SCVs, where cargo and pickup volumes declined 20% to 9.1k units. Heavy trucks also contracted 10%, while ILMCVs offered a bright spot with 11% growth. VECV reported modest overall growth, despite a dip in its bus segment, and Mahindra & Mahindra witnessed a low single-digit decline in its LCV volumes. Despite improving wholesale numbers, retail momentum remained tepid, especially in the second half of May, as per channel feedback. Anticipated pre-buying ahead of the June 8 mandate for air-conditioned driver cabins, expected to increase vehicle prices by ₹35,000–50,000, failed to provide meaningful traction, reflecting buyer caution and delayed fleet replacement demand.
Tractors
The tractor segment remained resilient in May 2025, with modest YoY growth in both domestic and export markets. Mahindra & Mahindra posted a 10.4% YoY increase in overall volumes, while Escorts registered a slight decline of 2%. The outlook for the segment remains positive, supported by higher kharif procurement, favourable reservoir levels, continued government support, and an optimistic monsoon forecast, all of which are expected to bolster rural demand in the coming months.
You might also Like.
Edit Announcement Impact Companies Enhancing the credit guarantee cover for...
Major economic updates Source: NSE/BSE India’s economy continued its robust...
