The Indian passenger vehicle market is predicted to see a moderate growth rate in the current fiscal year. ICRA, a rating agency, forecasts a wholesale volume growth of around 1 to 4 percent for the sector in fiscal year 2025. This follows a 1.1 percent decline between April and July 2025.
ICRA attributes the subdued growth to elevated inventory levels and a robust base from the previous year. Dealer organizations reported an average inventory of 55 days by the end of July.
Despite these challenges, the agency suggests that new model launches and potential Goods and Services Tax (GST) reforms by the government could boost demand. The government is considering simplifying GST slabs, which could reduce taxes on small cars, potentially leading to higher sales.
Passenger vehicle wholesale sales rose by 8.9 percent month-over-month in July 2025, driven by increased stock shipments to dealers in anticipation of the festive season. However, year-on-year volume remained relatively steady at approximately 3.4 lakh units.
Retail sales also saw a 10.4 percent MoM increase in July, though they experienced a slight 0.8 percent year-on-year decline. SUVs continue to dominate the market, accounting for 65-66 percent of total passenger vehicle volume, according to ICRA. Utility vehicles are anticipated to be the primary engine of growth in the coming months.
Exports of passenger vehicles grew by 9% year-over-year in July, with Maruti Suzuki and Hyundai Motor India playing a significant role. While the automotive sector is currently experiencing a slower pace of expansion, the upcoming festive season, new product introductions, and possible tax changes could bolster market performance in the upcoming months.