Retail vehicle market closed the first quarter of FY26 on a relatively firm footing with a 4.85% year-on-year rise in total volumes across all categories, as posted by the Federation of Automobile Dealers Associations (FADA). A closer look at the June 2025 monthly data reveals growing stress across several segments, as monsoon disruptions, tight liquidity and variant unavailability weigh on conversions, despite OEM incentive schemes and inventory pushes.
2W Have Rural Support Countered By Urban Decline
Retail volumes for two-wheelers in June stood at 14.46 lakh units, reflecting a modest 4.73% YoY rise but a sharp 12.48% decline on a month-on-month basis. The rural sector buoyed by early Kharif sowing and above-average monsoons registered a 2.62% YoY increase, while urban markets posted a 7.72% YoY uptick. However, compulsory billing practices, limited financing options, and supply-side issues with variant availability undermined retail traction.
Hero MotoCorp retained its lead with 27.23% market share, though it lost some ground compared to last year. Honda and TVS followed closely, while EV penetration in the segment inched up to 7.28%, led by Ola Electric and Ather, though both saw MoM declines. Petrol-powered models still held over 92% share.
PVs Show Flat Conversions Amidst Elevated Inventory
Passenger vehicle (PV) retails reached 2.97 lakh units in June, up 2.45% YoY but down 1.49% MoM. Dealer inventory stood at 55 days, with OEMs reportedly pushing wholesale volumes through auto-debit mandates. Heavy rainfall and liquidity concerns dented conversion rates despite attractive schemes. Bookings remained tepid, with just 38% of dealers reporting good enquiry flow.
Maruti Suzuki continued to dominate with 39.15% market share, followed by Mahindra (13.74%), Hyundai (12.87%), and Tata Motors (11.73%). While hybrid and EV variants gained ground marginally, with 8.13% and 4.43% shares respectively, petrol still accounted for nearly half of all PV sales.
CVs Face Regulatory Pressures Offsetting Early Deliveries
CV retail volumes stood at 73,367 units, rising 6.6% YoY but declining 2.97% MoM. Urban CV sales grew 12.26% YoY, while rural areas remained nearly flat at 0.83%. The early part of the month saw stronger activity, but new taxation norms and the mandate for air-conditioned cabins increased ownership costs. This, combined with a softening infrastructure demand, curbed momentum in the latter half.
Tata Motors led the CV segment with a 33.31% market share, though its volumes declined YoY. Mahindra posted a significant rise to 26.83%, while Ashok Leyland and VECV maintained steady positions. CNG adoption remained at 11.83%, while EVs in this category stood at 1.56%.
3Ws See Higher EV Penetration But MoM Volumes Decline
The three-wheeler segment clocked 1.00 lakh units in June, marking a 6.68% YoY growth. EVs commanded a dominant 60.18% share in the category, up significantly from last year. Bajaj Auto retained its strong lead with 35.92% market share, while Mahindra, Piaggio and a growing number of electric brands continued to expand their presence.
Construction Equipment & Tractors Show Strong Gains
Construction equipment sales posted the most robust growth among all categories, rising 54.95% YoY and 44.98% MoM to 8,558 units. The surge was attributed to high government capital expenditure on roads, metros and energy infrastructure. JCB led the segment, though its YoY share declined due to other players like Case New Holland, Liugong and Tata Hitachi posting higher volumes.
Tractor retails rose 8.68% YoY, with Mahindra and its Swaraj division continuing to dominate. Strong rural demand and improved farm sentiment, supported by an 11.3% increase in Kharif sowing, underpinned the segment’s resilience.
Fuel Mix
Across categories, EV penetration continued to rise steadily. In the two-wheeler space, electric models now account for 7.28% of all retails. Passenger vehicles saw EVs grow to 4.43% share, while hybrids held 8.13%. CNG uptake improved in PVs to 20.82%, whereas diesel remained dominant in CVs and tractors.
As July unfolds, the overall outlook remains cautious. Monsoon overperformance (106% of LPA) is a tailwind for rural demand, especially in two-wheelers and tractors. However, logistical disruptions due to flooding in several regions, price hikes, constrained financing, and the global supply chain impact of rare-earth shortages continue to pressure the ecosystem.
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