India’s Car Sales to Dealers Hit 18-Month Low in June Amid Weaker Urban Demand

In June 2025, India’s automotive industry registered its lowest car sales to dealers in 18 months, with urban demand experiencing a notable slump. According to SIAM, 312,849 units were dispatched to dealerships, down 7.4% compared to June 2024 figures.

June 2025 Car Sales Decline 

Automakers delivered 312,849 passenger cars to dealerships across India last month, falling from 337,757 units in June 2024. The 7.4% drop highlights weakened purchasing sentiment, largely centred in urban regions. 

Factors like restrained income growth and shifts in discretionary spending led to reduced footfalls. The April to June 2025 quarter saw total passenger vehicle sales drop 1.4% YoY, reaching a 2-year low. Sequentially, sales dipped 13% from March 2025 levels.

Sluggish Start to FY26 After 3 Years of Momentum

The overall industry momentum appears to have slowed significantly. Passenger vehicle sales rose only 2% in FY25 versus 8.7% in FY24 and 27% in FY23. FY26 is projected to see growth limited to just 1%–2% as macroeconomic pressures dampen consumer confidence despite price adjustments and offers from manufacturers.

Segment Trends: Utility Vehicles Gain While Cars Drop

May 2025 data revealed that despite a minor 0.8% increase in total domestic PV sales, individual segments performed unevenly. Car sales shrank by 12.2% while utility vehicles grew 7.6%, indicating a shift in consumer preference. Vans also showed resilience, clocking 12.5% growth. This supports the growing appeal of multi-functional mobility over conventional sedans.

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Component Shortage and Supply Chain Challenges

India’s auto industry is also contending with rare earth material shortages affecting key components, especially in the electric vehicle segment. With China tightening export rules, around 30 import applications remain pending approval, delaying part supplies and hampering production efficiencies. This supply-side barrier adds more strain to a market already under consumer-side stress.

Industry Banks on Festive Boost

Looking ahead, the industry hopes for a revival during the July to September 2025 festive season. Manufacturers are banking on improving rural sentiment, benefits from interest rate cuts, and increased consumer engagement to offset current headwinds. However, sustained relief will depend on rapid clearance of supply bottlenecks and a rebound in urban demand.

Conclusion

India’s passenger car market witnessed a notable setback in June 2025, with urban demand softening and logistical challenges piling up. While seasonal factors may aid in short-term recovery, long-term prospects hinge on macroeconomic stability and restored consumer sentiment.

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