The Indian passenger vehicle industry is expected to see a moderate expansion this fiscal year. ICRA’s projections indicate a wholesale volume growth of roughly 1 to 4 percent for the sector in fiscal year 2025. Notably, a decrease of 1.1 percent was observed from April to July 2025.
ICRA points to high inventory levels and a strong performance in the preceding year as factors contributing to the current growth slowdown. Data from dealer associations show that dealers held an average of 55 days of inventory at the close of July.
The agency remains optimistic, suggesting that a stream of new model releases from automakers, coupled with prospective Goods and Services Tax (GST) reforms from the government, could stimulate demand in the future. The government is exploring a reduction in the GST slabs, potentially lowering taxes on smaller cars and thereby increasing sales.
July 2025 saw an 8.9 percent month-over-month rise in passenger vehicle wholesale sales, driven by increased stock delivery to dealers ahead of the festive season. Despite this, year-over-year volumes remained largely consistent, at around 3.4 lakh units.
Retail sales mirrored the trend, with a 10.4 percent MoM increase in July, though a slight 0.8 percent year-over-year decrease was noted. According to ICRA, the SUV segment continues to lead, representing 65-66 percent of overall passenger vehicle volume. Utility vehicles are expected to drive future growth.
Furthermore, passenger vehicle exports surged by 9% year-on-year in July. Maruti Suzuki and Hyundai Motor India were key contributors to this increase. The auto sector is currently experiencing a moderated pace of growth. Nevertheless, the impending festive season, new product introductions, and potential tax reforms could provide a lift to the market in the months to come.