Festive Season Set to Rev Up Indian Auto Sales Amid Supply Challenges

Passenger vehicles and two-wheelers in India are poised for a significant sales surge as the festive season approaches, a period historically known for driving demand, notes the Society of Indian Automobile Manufacturers (SIAM). The report also underscores a beneficial above-normal monsoon, expected to bolster rural incomes, particularly supporting two-wheelers and entry-level vehicles reliant on rural demand.

Affordability and consumer sentiment in the auto sector are predicted to rise, aided by the Reserve Bank of India's cumulative 100 basis points reduction in repo rates over recent months, potentially easing borrowing costs. Nonetheless, OEMs face ongoing supply challenges, notably China's export licensing for rare earth magnets.

SIAM's findings reveal passenger vehicle sales surpassed 1 million in the first quarter of 2025-26 for the second consecutive year. The Utility Vehicles (UVs) segment, commanding a 66 percent market share, propelled this growth with a 3.8 percent increase. Conversely, passenger cars saw an 11.2 percent decline. Exports of passenger vehicles achieved a record 2.04 lakh units, up 13.2 percent, driven by strong demand in regions like the Middle East and Latin America. The two-wheeler segment faced a 6.2 percent slump to 4.67 million units due to inventory corrections, despite wholesale declines, retail registrations improved by 5 percent thanks to marriage season demand.

The three-wheeler category recorded its highest-ever Q1 sales at 1.65 lakh units in 2025-26, with a slight 0.1 percent uptick driven by the Passenger Carrier sub-segment and augmented economic activity, while exports grew by 34.4 percent. Commercial vehicles witnessed a 0.6 percent decline in sales but saw a 23.4 percent rise in exports.

(With inputs from agencies.)