India's auto sales flat in Q1 FY26; UVs, exports shine amid weak demand

India's auto sector began FY26 on a mixed note as UV sales and exports grew, but overall demand stayed soft. Two-wheelers and cars saw declines, while three-wheelers hit record Q1 sales

Automakers delivered 312,849 units to dealerships in June, marking a 7.4 per cent decline compared to 337,757 units year-on-year (Y-o-Y), according to a statement from the Society of Indian Automobile Manufacturers (Siam).

 

India’s automobile sector saw a mixed start to the financial year 2025-26, with total passenger vehicle sales crossing the one million mark for the second consecutive Q1. However, overall growth across vehicle categories remained subdued due to softer demand towards the end of the quarter.

Passenger vehicles: UVs gain share despite overall dip

Passenger vehicle sales reached 1.01 million units between April and June 2025, slightly down by 1.4 per cent compared to the same period last year. Utility Vehicles (UVs) continued to expand their presence in this segment, accounting for 66 per cent of sales and recording a 3.8 per cent rise Y-o-Y. In contrast, passenger car sales declined by 11.2 per cent. 

Exports of passenger vehicles hit an all-time high in a Q1 period, rising 13.2 per cent to 204,000 units. Growth was lead by steady demand in the Middle East, Latin America, and recovering markets such as Sri Lanka, Nepal, and Japan.

Two-wheelers: Decline in wholesale, but retail improves

The two-wheeler segment sold 4.67 million units, falling 6.2 per cent Y-o-Y, due to inventory adjustments by manufacturers. However, retail registrations increased by 5 per cent, supported by wedding season purchases and positive consumer sentiment. Scooters’ share within the segment rose by 2.15 per cent.

 

Two-wheeler exports grew strongly by 23.2 per cent to 1.14 million units, driven by a rebound in nearby countries and strong demand in key markets. 

Three-wheelers: Highest ever Q1 sales

Three-wheeler sales stood at 165,000 units, marking the highest ever Q1 volume with marginal growth of 0.1 per cent. Demand was primarily driven by the passenger carrier segment and increased financing availability. Cargo three-wheelers continued to see healthy retail registrations. Exports jumped 34.4 per cent to nearly 100,000 units.

Commercial vehicles: Flat sales but strong exports

Commercial vehicle sales were slightly lower, dropping by 0.6 per cent to 223,000 units. While the passenger transport sub-segment showed improvement, goods carriers recorded a modest decline. Exports performed well, increasing by 23.4 per cent to about 20,000 units.

 

Looking to the second quarter (July-September 2025), the industry expects a gradual recovery aided by seasonal factors and improved financing conditions.

 

Commenting on sales data, Shailesh Chandra, President, SIAM, said, “The performance of the Auto industry was relatively flat, though the retail registration for Passenger Vehicles, Two-Wheelers and Three-Wheelers were marginally higher than the previous Q1. Overall sentiments across categories have remained subdued so far, even as the industry continues to navigate supply-side challenges. With the upcoming festival season coupled with the benefits of RBI repo rate cuts, we expect consumer sentiments to improve.”

 

“Sales of Passenger Vehicles in Q1 of 2025-26 de-grew by (-) 1.4 per cent, posting sales of 1.01 million units as compared to Q1 of previous year. Sales of Three-Wheelers in Q1 of 2025-26 grew marginally by 0.1 per cent compared to last year, with 165,000 units, which is the highest ever in Q1. Two-Wheelers registered a de-growth of (-) 6.2 per cent in this Quarter, compared to last year, with sales of 4.67 million units, while Commercial Vehicles de-grew marginally by 0.6 per cent in Q1, compared to Q1 of last financial year, with sales of 223,000 units, ” added Rajesh Menon, Director General, SIAM.

 

Industry experts noted that challenges such as export licensing requirements from China for rare earth magnets could affect production in the coming months. Nevertheless, the festive season, improved rural incomes from a favourable monsoon, and recent rate cuts are expected to help lift demand.