India’s auto sector appears to have hit a speed bump in May, with wholesale sales slowing across most segments, except for tractors, which are set to defy the trend with double-digit growth. Retail momentum also seems to have cooled, with Nomura Equity Research noting a likely deceleration in demand during the month.
The passenger vehicle and medium and heavy commercial vehicle segments are expected to post an on-year decline in wholesale sales for May. Their sales are expected to have slid 1% and 5%, respectively during the month. Two-wheeler segment, on the other hand, is expected to report a muted growth of 2% year-on-year, Nomura said.
However, tractor wholesale sales are once again set to deviate from the flow as they are expected to post an 11% on-year growth on the back of positive rural prospects due to improved crop prices and good reservoir levels. The industry will likely see a 5% growth in FY26, the brokerage firm pointed. M&M's tractor volumes for May are expected to climb 9% on year to 40,500 units.
According to data by Society of Indian Automobile Manufacturers, passenger vehicle sales were 348,847 units in April, while that of two-wheelers the figure stood at 1.26 bn units.Three-wheeler makers sold 49,441 units in April, SIAM had said.
Passenger Vehicles: Inventory Piles Up, Retail Weakness Persists
Wholesale passenger vehicle sales for May are expected at around 344,000 units, compared with 347,492 units in May last year. This comes amid weakening retail demand, which has contributed to rising channel inventory. Retail PV sales are estimated to have declined 8% on year during the month.
Despite the current slowdown, lower income taxes and potential interest rate cuts are expected to revive demand in the second half of 2025. However, China’s export restrictions on rare earth magnets remain a key risk for vehicle production.
Among individual manufacturers, Mahindra & Mahindra is expected to report a 13% rise in utility vehicle sales, driven by the ramp-up of newly launched models of battery electric vehicles and Thar ROXX and XUV 3X0. Maruti Suzuki’s domestic PV sales are expected to fall 5% on year, while Hyundai’s domestic sales are seen slipping 8%. Tata Motors’ domestic PV sales are estimated to have declined by 1.5%, though exports may have increased by 13% on year in May.
Despite the decline, Maruti Suzuki’s market share likely remained steady at around 39.8%.
Two-Wheelers: Festive Demand Supports Modest Growth
Strong marriage season and positive rural sentiment would have likely supported the demand for two-wheelers in May. The brokerage firm expects the industry to grow 6.5% in FY26.
Total wholesale volumes for the segment are estimated at 1.66 million units, with registrations up 6% year-on-year. Bajaj Auto, TVS Motor, and Royal Enfield are projected to see healthy growth, with domestic sales expected to rise by 6%, 22%, and 21%, respectively. Bajaj Auto, in particular, continues to benefit from its affordable electric two-wheelers, wider dealer network, and recovering export demand.
Commercial Vehicles: Outlook Hinges on Infrastructure Spend
While limited infrastructure-related activities and capital expenditure spends had earlier impacted demand for commercial vehicles, the segment has shown a relatively better performance due to improvement in capex and demand from the tipper segment. A stronger recovery may be on the horizon if public and private sector investments pick up pace, Nomura noted.
Ashok Leyland is projected to post an 8% drop in wholesale volumes for May, while Tata Motors may report a 4% decline. In contrast, Eicher Motors’ CV segment is expected to see 9% growth, reflecting its resilient performance.
