Indian auto sales trends for May 2025: PV and M&HCV segments may face hurdles

Time of India

2 days ago

Indian automakers are expected to release
May 2025 sales data
on June 1, with early estimates indicating continued sluggishness in key segments, though two-wheelers and tractors may offer some support. Passenger vehicle and medium and heavy commercial vehicle categories appear to be facing pressure, while a looming production risk stemming from China's export restrictions on rare earth magnets, essential for both electric and internal combustion engine components, has been flagged by analysts at Nomura to Business Standard.
Despite these challenges, analysts maintain a cautiously optimistic outlook for certain segments, anticipating growth driven by factors such as rural demand, infrastructure development, and replacement needs.
Passenger vehicles demand to face a downhill?
Passenger vehicle sales in India experienced a slowdown in May 2025. Wholesales are estimated to have dipped by 1 per cent YoY, reaching approximately 344,000 units. Retail demand remained weak, declining by 8 per cent YoY, despite expectations of support from easing interest rates and lower income taxes. This decline in retail performance has led to an increase in dealer-level inventory.
Analysts suggest that a meaningful recovery in passenger vehicle demand is likely to occur only in the second half of calendar year 2025. An emerging concern for the industry is the potential for production disruptions starting in June. This is due to China's restrictions on the export of rare earth magnets.
These magnets are critical for both electric vehicles and internal combustion engine vehicles. They are used in essential components such as sensors, steering systems, and motors.
Nevertheless, analysts continue to maintain a 5 per cent YoY growth forecast for the passenger vehicle industry in fiscal year 2026. This forecast is based on expectations of demand normalization and minimal production impact.
Maruti Suzuki's domestic passenger vehicle wholesales, excluding OE and LCV, are projected to fall about 5 per cent YoY to 137,000 units. This is partially supported by channel filling.
Mahindra & Mahindra
is likely to see a 13 per cent YoY increase in utility vehicle volumes, reaching approximately 49,000 units. This growth is backed by robust demand for new models including the BE 6, XEV 9e, Thar ROXX, and XUV 3XO.
Its electric SUVs saw encouraging traction, with around 30,000 bookings on the first day.
The company has further outlined plans to launch seven ICE SUVs, five BEVs, and five LCVs by 2030, with several new models expected in FY26.
Tata Motors' passenger vehicle sales are estimated to grow about 1.5 per cent YoY to 46,000 units.
Hyundai Motor India may see domestic sales decline around 8 per cent YoY to 45,000 units.
A steady path for two-wheelers
The two-wheeler segment showed modest growth in May 2025. Wholesales are likely up by 2 per cent YoY.
Retail performance was stronger, with a 6 per cent increase over the same period. This was supported by strong rural sentiment and seasonal demand driven by weddings.
The outlook for the segment remains positive. Analysts are forecasting volume growth of 7.0 per cent in FY26 and 6.5 per cent in FY27.
Bajaj Auto is expected to post a 13 per cent YoY increase in total sales to around 402,000 units. This is driven by strong export growth in both 2W and 3W segments and a 6 per cent uptick in domestic 2W demand.
However, weak domestic 3W sales, estimated to fall by 5 per cent to 35,000 units, could partially offset gains.
The company continues to benefit from its growing EV portfolio, supported by affordable product offerings, expanding distribution, and improving export conditions.
TVS Motor is projected to post overall growth of 19 per cent YoY. Domestic volumes are expected to rise 22 per cent, and exports are increasing 9 per cent.
Hero MotoCorp's volumes are expected to remain flat YoY at around 500,000 units.
Royal Enfield is set to post a robust 21 per cent increase in volumes to approximately 86,000 units.
M&HCV to face hurdles
The medium and heavy commercial vehicle segment continued to face headwinds in May. Wholesales are expected to decline by 5 per cent YoY, and retail sales are down by 3 per cent.
Although freight rates remained stable, weak near-term demand has weighed on overall segment performance.
Analysts, however, remain cautiously optimistic. They expect the MHCV industry to grow at 5 per cent annually over FY26 and FY27, supported by replacement demand and anticipated improvement in infrastructure and capital expenditure.
Short-term recovery in demand will depend on the pace of infrastructure investments and project execution.
Ashok Leyland's wholesale volumes are likely to fall 8 per cent YoY.
Tata Motors' MHCV volumes may decline about 4 per cent.
Despite the current softness, analysts believe there is potential for margin improvement among original equipment manufacturers if broader economic activity picks up in the coming quarters.
In contrast, the tractor segment is expected to report robust growth. Wholesales are up 11 per cent YoY in May 2025.