Chemicals Monthly – June 2025 Update

In June 2025, the aggregate wholesale numbers exhibited by OEMs continued to highlight resilience, with the overall volumes climbing by 10.7% YoY. The growth theme remained the same, with SUVs leading the way in PVs, 2Ws continuing their double-digit growth and robust performance on the export front. A key highlight during the month was the healthy traction witnessed in the tractor space, amidst positive farm sentiment and expectations of above normal rainfall. In a major push to enhance road safety, the Ministry of Road Transport and Highways recently announced that all new two-wheelers, scooters, and motorcycles manufactured from January 2026 onward must be equipped with Anti-lock Braking Systems (ABS), regardless of engine capacity. This might imply higher costs for models for OEMs operating primarily in the entry-level space, particularly HMCL and TVS, which derive the majority of their revenue from this segment. Additionally, Maharashtra’s new tax structure, effective July 1, 2025, will likely dampen sales volumes for high-end cars and goods carriers due to significantly increased costs, potentially causing buyers to defer purchases or seek alternatives.

As we enter H2CY25, we sense that tractors and 2W will likely be the key gainers, benefitting from the improving rural sentiment and better kharif sowing period, aided by normal rainfall. Moderation in the SUV push is likely to be observed in the upcoming period due to a high base from previous years and saturation in first-time buyers. CV volumes would likely remain mixed, with buses reporting a higher growth rate compared to M&HCV and LCVs. Dampening of sentiment in the space is also expected in the short term, with the onset of monsoons and a halt in infrastructure spending.