India’s automobile industry delivered a mixed performance in the first quarter of 2025-26, with passenger vehicle exports reaching an all-time high even as domestic sales remained largely flat, according to data released by the Society of Indian Automobile Manufacturers (SIAM) on Monday.
Passenger vehicle sales crossed the one million mark for the second consecutive year in Q1, reaching 1.01 million units, though this represented a 1.4 percent decline compared to the same period last year. The segment’s performance was buoyed by utility vehicles, which now account for 66 percent of passenger vehicle sales and posted 3.8 percent growth, whilst passenger cars declined 11.2 percent.
The standout performer was exports, with passenger vehicles achieving record Q1 exports of 204,000 units, marking a 13.2 percent year-on-year increase. This surge was driven by stable demand across most markets, with particularly strong performance in the Middle East and Latin America, alongside recovery in neighbouring markets such as Sri Lanka and Nepal.
"The performance of the Auto industry was relatively flat, though the retail registration for Passenger Vehicles, Two-Wheelers and Three-Wheelers were marginally higher than the previous Q1," said Shailesh Chandra, President of SIAM.
The two-wheeler segment faced headwinds with wholesale sales declining 6.2 percent to 4.67 million units due to inventory correction across the industry. However, retail registrations increased 5 percent during the quarter, driven by the marriage season and positive demand sentiments. Two-wheeler exports showed robust growth of 23.2 percent to 1.14 million units.
Three-wheelers achieved their highest-ever Q1 sales of 165,000 units, representing marginal growth of 0.1 percent. The segment benefited from increased economic activity supporting urban transportation demand and easier financing options. Exports in this category surged 34.4 percent to 96,000 units.
Commercial vehicles posted a marginal decline of 0.6 percent to 223,000 units, though exports grew strongly by 23.4 percent to around 20,000 units.
Looking ahead to Q2, SIAM expressed cautious optimism despite ongoing challenges. The upcoming festive season is expected to drive demand, particularly for passenger vehicles and two-wheelers, whilst an above-normal monsoon could aid rural income recovery.
"With the upcoming festival season coupled with the benefits of RBI repo rate cuts, we expect consumer sentiments to improve," Chandra added.
The Reserve Bank of India's cumulative repo rate cuts of 100 basis points over the past six months are expected to gradually ease borrowing costs, potentially boosting consumer sentiment and affordability.
However, supply-side challenges persist, particularly the recent export licensing requirement from China on rare earth magnets, which has raised concerns for original equipment manufacturers across all categories.
"Sales of Passenger Vehicles in Q1 of 2025-26 de-grew by (-) 1.4 percent, posting sales of 1.01 million units as compared to Q1 of previous year," said Rajesh Menon, Director General of SIAM.
In June alone, passenger vehicle sales declined 7.4 percent to 312,849 units, whilst two-wheeler sales fell 3.4 percent to 1.56 million units. Three-wheeler sales bucked the trend with 3.8 percent growth to 61,828 units.
The industry's overall domestic sales fell 5.1 percent in Q1 to 60.75 million units, reflecting the challenging operating environment facing India's automotive sector.
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