Indian automotive industry has entered FY2025-26 with signs of both resilience and strain as highlighted in the latest vehicle sales data released by the Society of Indian Automobile Manufacturers (SIAM). While the sector clocked record exports and robust momentum in the utility vehicle (UV) segment, overall domestic sales volumes dipped by 5.1% year-on-year in the April–June quarter, totalling 60.75 lakh units across passenger vehicles, commercial vehicles, two-wheelers, three-wheelers, and quadricycles.
UVs Shine Amid Overall Dip In PVs
Passenger Vehicle (PV) sales in Q1 FY26 stood at 10.11 lakh units, a marginal decline of 1.4% compared to the same quarter last year. The sector witnessed a stark divergence within segments while passenger cars declined by 11.2%, utility vehicles rose by 3.8%, consolidating their market share at 66% of total PVs. This further underlines India’s ongoing shift towards larger, feature-rich vehicles, particularly SUVs and crossovers, at the expense of compact cars.
In export markets, PVs put up a record-breaking show. With 2.04 lakh units shipped in Q1, India registered its highest ever passenger vehicle exports, up by 13.2%. Growing demand in the Middle East, Latin America, and nearby South Asian markets, along with Free Trade Agreement-driven access to Australia, helped push this growth.
June alone recorded PV domestic sales of 3.12 lakh units, down 7.4% from June 2024, a drop partly attributable to a slow retail environment and shifting consumer sentiment in the latter part of the quarter.
2W Inventory Correction Weighs Down Wholesale
The Two-Wheeler segment experienced contractions this quarter. With 46.74 lakh units sold in Q1 FY26, the segment shrank by 6.2% compared to Q1 last year. Motorcycles were the worst affected, falling by 9.2%, followed by mopeds (-10.9%). Scooters remained relatively stable, slipping only 0.2%.
While wholesale volumes declined, retail registrations saw a 5% increase aided by strong marriage season demand and an uptick in consumer sentiment. The scooter segment’s share in the overall mix grew by 2.15% signalling a possible urban demand shift.
Exports were a bright spot with 11.4 lakh two-wheelers shipped in Q1, India posted a 23.2% growth over the previous year reflecting a rebound in regional markets like Nepal and Sri Lanka, and rising traction in key African and Latin American countries.
3Ws Show Modest Growth
The Three-Wheeler segment achieved its highest-ever Q1 sales with 1.65 lakh units, with a negligible 0.1% growth over last year. Passenger carriers led the charge growing by 1.7%, while cargo carriers declined marginally. Export figures remained strong, up by 34.4%, touching 96,000 units in Q1 FY26.
Retail trends suggest that intra-city goods transport and public mobility are reviving steadily, especially in urban centres. Moreover, easier access to vehicle financing has provided momentum to this low-cost commercial segment.
In June 2025, three-wheeler domestic sales touched 61,828 units, marking a 3.8% year-on-year growth.
CV Demand Holding, But No Spark
Commercial Vehicle (CV) sales remained nearly flat in Q1 FY26 at 2.23 lakh units posting a minor contraction of 0.6%. Within this, Medium & Heavy Commercial Vehicles (M&HCVs) fell by 2.3%, while Light Commercial Vehicles (LCVs) managed a slight growth of 0.4%.
The passenger carrier sub-segment within CVs continued to expand, possibly indicating sustained momentum in state transport and private mobility contracts. Goods carriers witnessed a mild pullback, especially in M&HCVs, affected by uneven freight movement and cautious inventory replenishment.
June’s monthly CV data was not disclosed in detail by SIAM, though the export growth remained notable, rising by 23.4% to nearly 20,000 units in the quarter.
Mixed Outlook
Looking ahead to Q2 (July–September 2025), the auto industry is cautiously optimistic. The festive season is expected to provide a natural demand boost, particularly for two-wheelers and entry-level cars. An above-normal monsoon could help rural income recovery, critical for mass-market sales.
Moreover, the Reserve Bank of India’s cumulative repo rate cut of 100 basis points over the past six months is likely to aid vehicle financing and affordability. However, OEMs continue to face cost pressures, particularly due to supply constraints like China’s recent export licensing requirements on rare earth magnets, a critical input for electric and hybrid vehicles.
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