Passenger vehicle sales as well as two-wheeler retail figures surged on a YoY basis, while MoM numbers dropped owing to geopolitical tensions and spillover effects from US tariffs.
The Indian auto industry witnessed a notable 4.84 per cent year-on-year growth in June 2025. Data released by the Federation of Automobile Dealers Associations (FADA) has revealed that all the segments of the Indian auto sector recorded positive growth in June this year as compared to the same month a year ago. However, the month-on-month data showed a steep decline in sales last month, as compared to May 2025.
The passenger vehicle retail sales recorded a 2.45 per cent YoY sales growth last month, while the two-wheeler segment posted an impressive 4.73 per cent spike in retail sales. On the contrary, PV sales recorded a 1.49 per cent slump last month compared to May 2025. Two-wheeler sales too registered a double-digit decline. The two-wheeler sales recorded a 12.48 per cent slump last month, as compared to the previous month.
Heavy monsoon and tight liquidity weighed on PV sales
Passenger vehicle retail sales slipped 1.49 per cent on a MoM basis last month, while registering a 2.45 per cent YoY growth. FADA has stated that heavy rains due to monsoon and tight market liquidity weighed on the consumer footfall in dealerships and conversions of reservations. Also, the supply chain crisis owing to China’s rare earth export curbs has resulted in the unavailability of specific variants, which has impacted overall sales. Besides that, the supply chain crisis and other issues have fuelled elevated inventory levels to about 55 days from 52-53 days in May this year. Number-wise, the passenger vehicle segment recorded 297,722 units last month, down from 302,214 units registered in the previous month and up from 290,593 units clocked in June last year.
Two-wheeler retail moderated by financing constraints and variant shortages
Two-wheeler retail sales dipped 12.48 per cent last month compared to May this year, but notched a 4.73 per cent gain on a YoY basis. While the festival and marriage season demand fuelled growth for the two-wheeler sales, financing constraints and variant shortages moderated MoM retail figures. FADA has stated that early monsoon rains and rising EV penetration also shaped buying patterns.
Rural demand to grow in near term
Above-average monsoon rains are forecasted to exceed 106 per cent of the long-period average (LPA)in July. This is anticipated to enhance the rural demand, benefiting the two-wheeler sales in rural markets. However, the heavy rains may also result in logistical challenges. Further, a surge in early Kharif sowing and government infrastructure projects is expected to boost two-wheeler sales, but geopolitical tensions and potential repercussions from US tariff measures could negatively impact supply chains and consumer sentiment, said FADA.
The apex dealer body has also cited heavy rains, price hikes, variant shortages, high-base effects, and tight financing, as well as elevated ownership costs, as challenges for retail sales growth in the near term. It stated that passenger vehicles face high-base effects and limited new-model launches, but festival planning and incentive schemes would offer some support.
FADA has said that it remains cautiously optimistic about the auto sector, leveraging rural demand drivers and government capex while remaining agile to navigate monsoon-related disruptions, supply constraints and liquidity pressures.
Get insights into Upcoming Cars In India, Electric Vehicles, Upcoming Bikes in India and cutting-edge technology transforming the automotive landscape.
First Published Date: 07 Jul 2025, 11:07 AM IST
