Rural slump ends India's four-year auto sales run, exports hit record high
Sales of cars, utility vehicles, and vans fell 1.4% year-on-year to around 1 million units last quarter, showed data from the Society of Indian Automobile Manufacturers (SIAM). Two-wheelers contracted 6.2% to 4.6 million units. SIAM counts automobile sales as factory dispatches and not retail sales.
PV exports however bucked the trend, growing 13% to 204,330 units, a record for a quarter.
Meanwhile, passenger vehicle sales slipped to an 18-month low in June, declining 7.4% year-on-year to 312,000 units, the lowest sales tally since last December. PV exports in June grew by 0.6% to 76,719 units. It marks a reversal from the strong sales performance since August 2024, driven initially by new model launches and improved supply chains.
Domestic two-wheeler sales fell 3.4% to 1.5 million units, but three-wheelers recorded a 3.8% rise to 61,828 units.'There is clear stress in the entry-level segment, particularly for cars under ₹10 lakh,' Shailesh Chandra, president of SIAM said at a media briefing on Tuesday. 'On the other hand, premium SUVs and higher-end vehicles continue to perform well, highlighting a tale of two markets.'Chandra attributed the demand slowdown to affordability challenges in rural areas, changing consumer preferences, and ongoing inventory correction. He also flagged a growing supply-side concern—continued delays in Chinese approvals for rare earth magnet exports, essential for electric vehicle (EV) production.On the exports front, in addition to PVs, other segments also posted strong performance. Two-wheeler shipments jumped 34%, followed by commercial vehicles (23%), and two-wheelers (23%), and passenger vehicles (13%), reflecting robust demand from international markets including Latin America, the Middle East, Japan, and Australia. On the shortage of rare earth magnets and its impact on the sector, Chandra said he expects the issue to be resolved soon. 'There are around 30 applications still awaiting approval in China. This poses a significant supply risk for the EV sector,' he noted. 'The industry is working to identify alternative sources and move toward long-term self-reliance with government support.'
In the two-wheeler category, monthly scooter sales declined 1.7%, motorcycles 3.7%, and mopeds plunged 17.4%, all pointing to sustained pressure on lower-income buyers. However, Chandra noted a 5% rise in Q1 vehicle registrations, driven by marriage-season demand and increased purchases by female consumers. Electric three-wheelers remained under stress, with e-rickshaw and e-cart sales declining nearly 14% and 25% respectively in June. But overall segment growth was supported by a 5.3% increase in passenger carrier sales, aided by improved access to financing.Looking ahead, SIAM expects demand to recover at a modest pace in the coming quarters, supported by the central bank's recent repo rate cut, infrastructure spending, and festive season tailwinds.
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Pakistan is one country with access to China's Beidou satellite system, both civilian and military. Pakistan is the only country that can access military satellites and military systems of China. So there's no doubt they would be getting real-time intelligence, information, Chinese satellites would probably be helping with targeting, precision strikes. These facts should have been factored into our military plans leading up to Operation Sindoor. These are very well-known things to the military and political leadership. Were we prepared for this four-day war to be a two-front war? From statements that emerged, it seems like a complaint that China helped Pakistan rather than something factored in. As far as the military is concerned, they know exactly what systems are being supplied to Pakistan by China, how Pakistan is utilising them. Perhaps if there was surprise, it was how very well network centricity works in the Chinese system—they seem very well networked. On the two-front question, we have traditionally looked at two fronts as geographically separated—northern border where China operates, western border where Pakistan operates. We need to start re-looking, and experts are talking about it, that you could well have one front with two adversaries—Pakistan is the front face with almost complete support from China, unless of course troops on the ground. Our thinking about two front needs to factor this in now. He actually said three front—China, Pakistan, and Turkey. If we knew this already, were we prepared? But there's realisation that this conflict may have inadvertently exposed India's vulnerabilities when General Rahul Singh said this was a live lab situation where they could observe performance of their military hardware given Pakistan, as well as how India responded. Did India expose itself? Always happens that you can have the best plans, equipment, strategy and tactics, but the real test comes in conflict. When you have kinetic attacks taking place, it exposes both strengths and vulnerabilities in your system, just as it exposed strengths and vulnerabilities of what the Pakistanis have. The Chief of Defence Staff (CDS) admitted there were some tactical shortfalls on the first day that led to some combat losses of aircraft. Lessons were learned and corrective measures put in place. Certainly, both strengths and vulnerabilities are literally exposed only during conflict. Both sides would be taking lessons from this. Even China would be very seriously looking at performance of their system. Some worked well. There was talk that the air defence system didn't work as well as they expected because they were unable to counter Indian strikes, particularly on May 9 and 10. All three sides will be looking at these issues. Why is there dissonance between military and political leadership messaging? The CDS said there were losses during combat, Indian Air Force losses. But the national security advisor in Chennai challenged anyone to provide photographic proof of even a single damaged structure. Why is political leadership saying we taught Pakistan a lesson while military leadership talks about our vulnerabilities? Political leadership on both sides will claim victory. Even Pakistan is saying they have been victorious. From the Indian perspective, it would be fair to say that in this short four-day conflict, India came out on top. We struck all the terrorist camps we set out to do. We managed to, once Pakistan responded with drone attacks and missiles over the next two, three days, largely hold them off without major damage on our side. As matters escalated, we carried out very successful strikes on May 9 and 10, which caused serious damage to aerial infrastructure, airfields, radar stations, air defence side. Dispassionately looking at it, India did well, India did better than Pakistan did. That's the context of how political leadership is framing it. As far as the military is concerned, one key element of a professional military is the ability to learn lessons from conflicts. It would be absolutely unprofessional if we said everything went fine, that there are really no lessons. The CDS was candid enough to admit shortfalls, which led to losses, leading to lessons learned, practices put in place that helped us succeed. Also Read | India-China will remain in state of armed co-existence until mistrust goes: Vijay Gokhale Are both leaderships on the same page, but conveying different messages? In different contexts. Political leadership is looking at it as a whole and saying, this is what we set out to do and this is what we've done. The military has said we have done a good job, but there are lessons we need to learn, and that is a good thing. After a four-year standoff with China at the Line of Actual Control (LAC), India is pursuing normalisation. External Affairs Minister S. Jaishankar is traveling to China today for the Shanghai Cooperation Organisation meeting and bilateral conversation with Chinese Foreign Minister Wang Yi. Shouldn't India be asking China about its role in helping Pakistan against India? Shouldn't that be on the agenda? It's well known that China has been supporting Pakistan both militarily and diplomatically. Chinese statements have come out saying their partnership with Pakistan is not directed at any other country. General Rahul has called it out by saying this is how it was. He used terms like Pakistan has been using China directly as a proxy to fight against India. How do we deal with it diplomatically? We need a more nuanced position. We are currently in the phase of trying to normalise relations after a difficult four and a half, five years. Does it suit us to have tension on the LAC at this time or to rake up these issues? There is dependency—trade dependency, pharmaceuticals, electronic parts, industrial equipment. This dependency is not going away in a hurry. We need to see what kind of strategic costs we are willing to pay. Doesn't mean we are turning a completely blind eye to whatever China is doing. We are seeing greater capability building along the LAC, infrastructure development is happening. Slowly we are trying to reduce our dependencies. We are talking about Make in India. But all this is going to take time. As far as dealing with China is concerned, perhaps outrage and emotion that has marked our dealings with Turkey need to be kept aside and the most strategic position taken. Different strokes for different folks—with Turkey we can afford to call them out, whereas with China we have to be more careful because of power asymmetry? There is power asymmetry. There are dependencies. China is our immediate neighbour. We have an unsettled border, which has created problems for both countries. Turkey is a distant neighbor, hardly have any trade. There were some defence deals supposed to be done between India and Turkey, but they've been called off because of statements supporting Pakistan. The relationship is different. The costs of calling out both countries are different. We can't deal with them with the same brush. Is normalising relations despite everything—China's support for Pakistan militarily, diplomatically, including helping water down UN Security Council statements after Pahalgam—the way forward? Should we think of normalising ties with Pakistan then? It would be ideal if you could normalise relations with Pakistan, but positions are today so far apart on two issues—Kashmir as far as Pakistan is concerned, and terrorism as far as India is concerned—that normalisation at this current juncture looks difficult. But between the two countries, there needs to be some communication channels that are open. If you can't have official communication channels, at least keep back channel communications in place. If a crisis occurs, management of that crisis bilaterally will only happen if there are mechanisms and back channels in place. Otherwise, then you will have issues like the two countries are not talking to each other. Then obviously third party mediation is warranted. Pakistan will go running to America or to Saudi Arabia. This is something we say we don't want. DGMO [Director General of Military Operations] hotline exists, but this is basically meant for tactical military issues. If political, diplomatic issues, strategic issues are to be discussed, there needs to be some channel between the two countries. When India and Pakistan arrived at the 2021 ceasefire agreement, thinking was that India had done well to de-hyphenate this, helping India focus on the LAC in Eastern Ladakh. From how the conversation is developing about how China helped Pakistan, is that idea of de-hyphenation no longer valid? Do we have to think of them as a hyphenated entity? Double the trouble. We did well in the past—our approach to the two countries was different diplomatically, politically, even militarily. It was for good reason. You pointed out the ceasefire that came about in 2021. Can we let this one issue dominate our complete bilateral ties with China? That because you are helping Pakistan militarily, this is going to be the key issue as far as India-China relations is concerned. I think that would be wrong because it would seriously limit our options on how we are dealing with China. We ourselves are very sensitive about hyphenation. India should not be hyphenated at all with Pakistan. The two different countries need to look at these two countries differently. The same approach has to be followed. Why do we think it's a good strategy to hyphenate Pakistan and China? Two completely different kinds of countries. People talking about equal hostility to both—I don't think that will work. Does it surprise you that the ceasefire is actually holding? It shattered during the conflict itself, Poonch took the brunt, but it's back to being observed. Even prior to Operation Sindoor, despite everything happening in Jammu and Kashmir—series of terror attacks in the Jammu region, hundreds of terrorists infiltrating across the IB or line of control—ceasefire was holding. There are good reasons why it was holding and the same reasons apply now. The kind of relief it provided to the local population—the ceasefire really was fighting between the two armies, but casualties were mostly civilians. Their daily lives were affected. After Operation Sindoor, both DGMOs have spoken and said, let's have a complete ceasefire. I'm not surprised the ceasefire is currently holding. But I would say it's a fragile ceasefire. You have these major terror incidents, some action is taken, immediately the ceasefire is going to break down. Will Pakistan now be a little more cautious about what it does with sending terrorists into India? That to some extent will define if the ceasefire holds because you can't isolate it from the political and diplomatic aspects. There's this whole business of new normal—if there's another terrorist attack, we launch another military operation against Pakistan. Do you think another conflict with Pakistan is inevitable? In some ways, it is inevitable for a couple of reasons. India has laid down a new doctrine which says a major terror attack will be decisively responded to. Pakistan nuclear blackmail and nuclear bluff is not going to work. We don't distinguish between terrorists and their handlers, which means Pakistan military is a direct target. We are not distinguishing between terrorists and Pakistan military, which is helping these terrorists. This makes the whole situation more crisis prone. Whether it will lead to major war, all-out conflict, I don't know. But my sense is the risks have increased of conflict between India and Pakistan. The next crisis, in my view, you could see much faster escalation. You could see geographically spread—this time, fortunately, the Indian Navy did not get involved, but they were ready. If the crisis lasts maybe a week, you could well see even the Navy involved. There are risks here to how the situation is moving between India and Pakistan. With the new red lines that have been laid down by India, unless Pakistan really controls terrorist groups—which I'm not sure even if they want to, they can—you could well see a new crisis. When General Rahul Singh made his statements about lessons to be learned, was he warning that politicians can make speeches about a new normal, launching military response to terrorist attacks in Pakistan, but that may not be the wisest option because now you have to consider this reinforced one border, three adversaries fighting you? I wouldn't interpret it that way. In a democracy, decisions are taken, political objectives are laid down by political leaders. If the prime minister lays down some red lines, the military gives professional advice and says, this is how we suggest we should do. But ultimately, the decision to use military force or not is that of the political leader. What has happened with the new red lines, and the CDS also mentioned, means that the military will have to remain in a much higher state of readiness. Not like 1971, where you will get six months to prepare and then go for an all-out war. But a major terrorist attack can happen. In all three instances of 2016, 2019, and 2025, the military had to respond in about 10 days, which means high levels of readiness. The government has said, this is how we want you to do this. I just hope it gives the military everything it needs to be prepared for operations at very short notice—adequate stocking levels, not running around for emergency procurement. And second, the fact that you are going to see a degree of collusion between Pakistan and China, and therefore equip the Indian military with whatever it needs to handle that threat. Is there something we can do to prevent it from happening at all? Communication between the two sides. Before a crisis happens, before it turns into conflict, if there are some crisis management mechanisms, communications happening between say the NSAs on both sides. It's a fact that India is now fed up with this 30 to 35 years of continuous terrorist attacks coming from Pakistan. Patience has run out. Even if tomorrow there's a new government in place, the standards that have been set are not going to change. People are going to expect something to happen. Can we stave off this crisis? It can only happen if we are talking to each other, finding some via media during a crisis to stave off the direct use of military. Also Read | In dealing with Pakistan, India has to choose from a menu of bad options: T.C.A. Raghavan Many military commentators talk about a three front against India—China, Pakistan, and Bangladesh. How real is this assessment militarily? On the military threat from Bangladesh, I would say it's a bit exaggerated. Let's not think it is on the same lines as Pakistan or China where we actually have live frontiers, live borders. What's happened in the past few months is Bangladesh getting closer to China, ties between Bangladesh and Pakistan are improving. But frankly, it's more a diplomatic challenge. I would not take this as a direct military threat. Yes, there is anti-India sentiment, anti-India rhetoric happening. But there is also huge dependency. Trade through land routes via India, they are hugely dependent on that. They're getting energy, electricity from India. Thirty per cent of their cotton comes from India for their textile industry, which is their biggest export market. They understand the limits of how much they can push. I don't really see it translating into a direct military threat. People are talking about radicalisation, and that's something we need to look at. But I wouldn't say a third front has opened up against India. When an elected government is in place, perhaps you will find dealing with greater maturity and responsibility than the current unelected interim government. Diplomatically is where we need to look at how to deal with Bangladesh. The reference when people talk about this third front is that Pakistan or China may use Bangladesh territory to launch sub-conventional attacks—Bangladesh territory may be used for militant outfits or radicalised Islamist outfits. There is a level of radicalisation happening. It's for us to check our borders, make sure physical movement doesn't happen. Some of that has to be dealt with ourselves. Our own policies with regard to dealing with radicalism are also not fully matured. Where do you hear of counter radicalisation drives? Getting extremist elements trying to get them back into the mainstream? Some things could happen, but I will not take that so much as a live threat as compared to Pakistan and China. Even with Pakistan, in Kashmir, policing our own borders better, guarding our frontiers, making sure terrorists do not get to launch attacks inside the country—preventing it rather than being forced to do something after the fact—should be the approach in Kashmir as well, not just on the Bangladesh border. Absolutely. There is a lot of focus on counter infiltration in Jammu and Kashmir. The terrain is also different. Particularly in the Kashmir Valley, in the winters, you'll get 20 feet of snow. Your fence gets completely damaged and has to be repaired every year. Fighting keeps happening on the borders, which also makes counter infiltration difficult. Some of these challenges are not there on the Bangladesh border, but I completely agree. Strengthening of the counter infiltration grid in Jammu and Kashmir is an integral and essential part of our strategy to counter terrorism. Nirupama Subramanian is an independent journalist who has worked earlier at The Hindu and at The Indian Express.
