The domestic passenger vehicle industry is anticipated to experience a modest increase this fiscal year. According to the rating agency ICRA, the wholesale volume growth for this sector is estimated to be approximately 1 to 4 percent in fiscal year 2025. However, a decline of 1.1 percent was observed between April and July 2025.
ICRA noted that high inventory levels and a strong base from the previous year are putting pressure on growth this year. Data from the Federation of Automobile Dealers Associations (FADA) indicates that dealers had an average inventory stock of 55 days at the end of July.
Nevertheless, the agency believes that the continuous launch of new models by automobile companies and potential GST reforms by the government could lead to increased demand in the coming months. The central government has proposed reducing the GST slabs from the current 5, 12, 18, and 28% to only 5 and 18%. If taxes are reduced on the small car segment, an improvement in sales could also be seen.
Wholesale sales of passenger vehicles increased by 8.9 percent month-on-month in July 2025. This rise was due to companies sending more stock to dealers before the festive season. However, volumes remained stable at approximately 3.4 lakh units year-on-year.
Retail sales also increased by 10.4 percent MoM in July, but there was a slight decline of 0.8 percent year-on-year. According to ICRA, the SUV segment continues to dominate, contributing 65-66 percent of the total passenger vehicle volume. Utility vehicles are expected to remain the main drivers of growth in the coming months.
Passenger vehicle exports recorded a 9% YoY increase in July. Maruti Suzuki and Hyundai Motor India contributed the most to this. Overall, the auto sector is progressing at a slower pace this year. However, the festive season, new launches, and potential tax reforms could provide strong support to the market in the coming months.
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