The voice about India’s car market staring at stagnancy is growing amid much selling by foreign investors in the stock market. Auto sticks of OEMs and suppliers have taken a beating lately. The reasons for stock market decline are said to be structural issues as well as geopolitical issues. In other words, they are local as well as global in their nature. The Indian auto industry – as the largest contributor of GST to the exchequer and among the highest contributor to the country's manufacturing GPD – is also quite local and global in its ways of working. 

Like any other developing nation, it is a market where the scope for an increase in automobile population is bright. It is also a market that is beset by structural issues nonetheless. With 34 cars owned per 1,000 people, the country with a population estimated to be 1,463,865,525 in 2025 has ample scope for auto sales growth. 

But as banks struggle for liquidity and a reduction in repo rate by the apex bank fails to reflect in the reduction of loan interest rates or equated monthly instalments, the structural issues facing the automobile industry are too stark to overlook.

Adding to the structural issues are perhaps developments such as the recent announecement by Maharashtra Government to levy six percent motor vehicle tax on premium electric vehicles. The leading industrialised state also has among the highest road toll taxes among other Indian states. The highway network in the state is among the most lacking and unsafe. Most roads in the state have either deteriorated or are under a seemingly unending period of repairs. 

The state government in its 2025 budget has also announced that it has raised the motor vehicle tax by one percentage point on individual-owned non-transport four-wheeler CNG and LPG vehicles. Such vehicles currently attract a seven to nine percent tax depending on their type and price.

While electricity costs have been rising with distribution companies like MSEDCL pushing for a revision in fixed and energy charges for various categories in order to bridge revenue gap, owning electric vehicles and CNG vehicles is becoming costlier though eco-friendlier.

Attracting over 200 percent in taxes, petrol and diesel prices have been at an all-time high. A timely upward revision in toll prices is only adding further to the cost of motoring in a country where close to or more than 50 of the vehicle purchase price amounts to taxes. Spares are also taxed at a hefty 28 percent and the labour costs have steeply risen post Covid-19 pandemic.

With vehicle prices being jacked up by automakers under the pretext of rising input costs by about four to five percent if not more, the Indian auto industry is clearly under pressure to maintain its margins and stay profitable.

Against the operating costs, the foot falls in the showroom are taking longer to realise into actual sales. Discounts are gaining speed and indicative of sales losing stream in some of the segments that were until recently doing very well.

Any excitement about a rebate in Income Tax up to INR 1,200,000 – it takes over INR 1,000,000 to purchase a decent car in India today – seeming to have faded into thin air, the talk about government announced a reduction in GST taxes has gained speed. When it would actually come into effect is yet to be known but the narrative has started building. The stock market does not look excited however and the money lost by domestic investors may take a long time to come back, it seems.

As US President Donald Trump speaks about exposing India’s ‘wrong’ tariff policies in the absence of any statement from the Indian government striking out his claims, the Indian market for automobiles and other consumer goods looks destined for a rough ride. Stagnancy will be a part of the plot, the repercussions of which would stem from domestic structural issues as well as geopolitical shifts where calls like ‘China Plus One’ hold no value at all anymore.

With the entry of Tesla – which has seen its sales and stock prices plummet in many of existing markets off late – set to enter India with the government lowering tariff under pressure from the US President, the subject of too much regulation needs to be examined in terms of structural strength and the industry’s ability to be competitive. Local manufacture is also a subject that needs to be looked at as MSME sector continues to shrink and take down with it the PMI index.

Skilling is also a subject that should be looked at as engineering courses lose interest with the young in the country. A manufacturing-less economy that is also witnessing the services sector face a slowdown – again due to structural and geopolitical issues – may not spell a good omen for growth in the long run. This, particularly in the case of a country whose median age in 29 years.

China’s ‘Deep seek’ has shown how the prowess in technology can shift overnight and highly influence the economy of a nation, its stock markets suddenly. In India, the auto industry should nurture the MSME sector as much as the government should. A services alternative in terms of growth over manufacturing may not hold forth in the long-term. Manufacturing exports can shrink abruptly anytime under the shifting regulatory and other market issues in the domestic marketplace and under the shifting geopolitical situations in various parts of the world that also make lucrative export markets.  

Image for representative purpose only. 

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The Society of Indian Automobile Manufacturers (SIAM) convened its 11th Automotive Logistics Conclave today in New Delhi, spotlighting the shift toward more efficient and sustainable logistics in India’s fast-growing automotive sector.

Centred around the theme 'Enhancing Efficiencies in Automotive Logistics,' the event brought together key government officials, automotive leaders, and logistics service providers to deliberate strategies for building a resilient and eco-conscious logistics ecosystem.

Senior Railway Board official Hitendra Malhotra announced the introduction of specialised, higher-capacity railway wagons, including double-deck options tailored for SUVs, supporting increased vehicle transport needs.

Tapan Ghosh, Chairman of the SIAM Logistics Group and VP at Hyundai Motor India, noted that the sector has witnessed a 7.3% growth in FY 2024–25, attributing part of this expansion to enhanced logistics capabilities. Industry players highlighted a growing reliance on digital innovation, multimodal transport solutions, and rail-based logistics to increase efficiency and reduce carbon footprint.

S D Chhabra of Maruti Suzuki emphasised the integration of real-time tracking technologies and a broader push toward sustainability. Policy alignment and infrastructure development were also key focal points, with participation from leading firms including Mahindra & Mahindra, Ashok Leyland, Chetak Logistics, and APLL VASCOR.

The conclave reinforced SIAM’s commitment to green mobility, with discussions calling for industry-wide adoption of eco-friendly practices and regulatory coherence aligned with India's national sustainability goals.

Several logistics providers were recognised at the event for excellence in innovation and operations, underscoring the sector’s critical role in shaping the future of Indian mobility.

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The Indian Racing League (IRL) formally launched its 2025 season with a driver draft event held in Mumbai. This marked the first time a driver draft format was used in Indian motorsport, featuring the selection of 24 drivers across 6 city-based franchises, including international racers, Indian talent and women drivers.

Each team picked four drivers based on a fixed structure: one international driver, one emerging Indian or international talent, one Indian domestic racer and one female driver. Among the key names drafted were Le Mans winner Neel Jani, GP2 veteran Jon Lancaster, IRL champion Raoul Hyman and young Indian racers Ruhaan Alva, Sohil Shah and Akshay Bohra. Women racers such as Caitlin Wood, Fabienne Wohlwend and Laura Camps Torras also joined the grid, bringing diverse experience from series like the W Series, GT racing and F4.

The event also featured a joint press conference with all six team owners — including Arjun Kapoor, Naga Chaitanya, John Abraham, Sourav Ganguly, Sudeep Kichcha and Keerthivasan — who introduced their teams and outlined their plans for the season. Racing Promotions (RPPL) Chairman Akhilesh Reddy stated that the draft aimed to bring greater structure and inclusivity to Indian motorsport. The 2025 IRL season begins in August and will be held across city circuits and racetracks throughout India.

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The Federation of Automobile Dealers Association (FADA), the apex body representing automotive dealerships in the country, has released the retail sales data for June 2025, which saw a total of 2 million vehicles sold in the country, which was 4.84 percent higher YoY, but 9.4 percent lower than the previous month.

Last month, two-wheeler sales continued to be in the green with 1.44 million units sold, as against 1.38 million units sold last year. Three-wheeler sales grew by 6.6 percent, while passenger vehicle sales at 297,722 units, saw a flattish growth of 2.45 percent YoY. Tractor sales at 8.6 percent, construction equipment at 54.95 percent and commercial vehicle with 6.6 percent showed signs of healthy growth.  

C S Vigneshwar, President, FADA, said, “While two-wheelers showed some early-cycle softness, we remain confident of a robust ramp-up in the coming months as seasonal demand and targeted OEM initiatives take effect.”

He pointed out that while festival and marriage-season demand provided a boost, financing constraints and intermittent variant shortages moderated sales. Early monsoon rains and rising EV penetration also shaped buying patterns in the two-wheeler segment.

“Several dealers cited compulsory billing and forced stock lifts – often via auto-debit wholesales – leading to mandated high days of inventory aligned with festival-season targets. Overall, June demonstrated a resilient two-wheeler performance amid mixed market signals,” he noted.

In the passenger vehicle space despite elevated incentive schemes and fresh booking lent support, heavy rains and tight market liquidity impacted sales. “Some dealers indicated that certain PV OEMs have introduced compulsory billing procedures – such as automatic wholesale debits – to meet volume targets; inventory consequently stands at around 55 days. June thus painted a picture of modest but steadfast PV performance amid varied market cues,” Vigneshwar said.

The CV segment saw early-month deliveries buoy volumes before monsoon-induced slowdowns and constrained liquidity dampened inquiries and conversions. The impact of new CV taxation along with mandatory air-conditioned cabins has elevated ownership cost, alongside muted infrastructure demand.

Cautious optimism

Looking ahead, the retail body anticipates a period of mixed fortunes. Above-average monsoon rains in July, are expected to boost rural demand, particularly for two-wheelers, thanks to stronger farm incomes highlighted by an 11.3 percent YoY increase in Kharif sowing. However, intense rainfall in some regions could create logistical challenges.

Simultaneously, substantial government capital expenditure from June to August on infrastructure projects like roads, railways, metros and green energy initiatives will continue to support the CV and CE segments.

Despite these positive drivers, several headwinds remain. Evolving geopolitical tensions and potential repercussions from US tariff measures necessitate careful supplychain management and could dampen consumer confidence. Furthermore, scarcity of rare-earth materials is hindering component production, which in turn limits overall supply and retail volumes.

In the two-wheeler market, early monsoon showers and renewed rural activity have sparked interest, but heavy rainfall, component shortages and price hikes effective this month are impacting conversions. Passenger vehicles face challenges from high-base effects, a limited number of new model launches and tight financing, although festival planning and new incentive schemes offer some counterbalance. Commercial vehicles continue to contend with subdued infrastructure demand, increased ownership costs due to new taxes and mandatory air-conditioned cabin regulations, though extended order pipelines provide some relief.

Vigneshwar expects that July is likely to see a blend of agrarian tailwinds and the positive impact of school reopenings, tempered by seasonal difficulties, higher prices and liquidity constraints.

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Tata Motors, one of the leading passenger vehicle and commercial vehicle manufacturers in the country, has announced its wholesales for June 2025 and Q1 FY2026.

The company reported that its total PV sales came at 124,809 units in Q1 FY2026, down 10 percent from Q1 FY2025 on a YoY basis. Domestic PV sales, including EVs, came at 123,839 units, down 10 percent YoY. For June, PV sales came at 37,083 units, down 15 percent compared to the same period last year.

Shailesh Chandra, Managing Director, Tata Motors Passenger Vehicles and Tata Passenger Electric Mobility, said, “In Q1 FY2026, the passenger vehicle industry experienced volume pressures, particularly in May and June, with flat growth reflecting continued softness in demand."

"The electric vehicle segment emerged a bright spot, driven by robust growth and the launch of new EV models across OEMs, enhancing customer interest and consideration. Tata Motors reported wholesales of 124,809 units in Q1 FY2026, including 16,231 EV units, underscoring our commitment to aligning wholesale and registration volumes. EV sales gained strong momentum towards the end of the quarter with a healthy growth trajectory. The refreshed Tiago posted 16 percent YoY volume growth in Q1 FY2026 and new launches – Altroz and Harrier.ev – saw a positive market response, with their full impact expected in the coming months,” he said.

On the other hand, Tata Motors’ commercial vehicle (CV) business reported sales of 85,606 units, down 6 percent YoY for Q1 FY2026. Domestic CV sales at 79,572 units, were down 9 percent as compared to Q1 FY2025.

In June 2025 alone, total CV sales came at 30,238 units, which is 5 percent lower than June 2024. In the domestic market, the demand for Medium and Heavy Commercial Vehicles (MH&ICV) came at 12,871 units, as against  4,640 units for the same period last year. During Q1 FY26, MH&ICV domestic sales were 37,370 units as against 40,349 units in Q1 FY25.

Girish Wagh, Executive Director, Tata Motors, said, “Q1 FY26 began on a subdued note for the commercial vehicle industry with muted performance in the HCV and SCVPU segments while buses, vans and ILMCVs registered modest year-on-year growth. Tata Motors Commercial Vehicles recorded domestic sales of 79,572 units, 9.2 percent decline compared to Q1 FY25."

"However, June 2025 witnessed a sequential growth of 8 percent over May 2025. Additionally, our International Business delivered a robust 67.9 percent growth in volumes over Q1 FY25. During the quarter, we launched India’s most affordable mini-truck, the Ace Pro, offered in petrol, bi-fuel and electric powertrains, which received an encouraging market response. We enhanced driver comfort by introducing air-conditioned cabins across our entire range of light to heavy trucks. We also expanded our international footprint by entering Egypt and expanded our offerings for the Middle East North African region,” Wagh added.

Going forward, Wagh stated that with forecasts for a healthy monsoon across the country, a reduction in repo rate and renewed thrust on infrastructure development, will bring back sales momentum for the commercial vehicles segment.

Chandra too shared his optimism for the PV market and stated, “Looking ahead, while overall industry growth is expected to remain subdued, Tata Motors is well positioned to leverage its new launches to outperform across segments—including hatchbacks and SUVs, while continuing to build on the EV momentum.”

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