India’s passenger vehicle (PV) market grew slower than expected in the first half of FY25, with a growth rate of only 0.5%, lower than the 3-4% initially predicted by the Association of Indian Automobile Manufacturers (data released by the industry body on Monday showed that Siam .
While automakers hope to send positive news during the upcoming festive season, a poor performance could drag down overall growth forecasts for the year, setting the stage for cooling expectations for the year.
Siam president Shailesh Chandra expressed disappointment with the market’s performance in the first half of the year, pointing to a series of unforeseen events in May, June and September that sapped the market’s momentum. “Three out of six months in the first half were below expectations, which contributed to this decline,” Chandra told Mint. “Several factors such as the election, heatwave and heavy rains in some areas contributed to this increase. dull.”
Chandra acknowledged that while the second half of the year could bring stronger growth, full-year figures are unlikely to hit the original 5-8% target, with growth now expected to stabilize below 5%.
From April to September this year, the automaker’s passenger car sales increased by only 0.5% to 2.081 million units, compared with 2.071 million units in the same period last year. Siam data showed that passenger car shipments fell by 1.4% year-on-year in September.
Will car sales pick up in the second half of the year?
While April’s festive season initially boosted expectations, markets failed to maintain the expected momentum in subsequent months. However, Chandra said festive sales in early October have shown promising signs with vehicle registrations up 30-35% compared to September, raising hopes of a rebound in the second half of the year.
Despite challenges in the first half of FY25, Siam remains cautiously optimistic about a gradual recovery in the second half of the year, driven by festive sales and new model launches. However, the industry is bracing for a weaker-than-expected year, with full-year growth likely to be lower than originally forecast.
“I firmly believe that high single-digit growth in the second half of the year is imperative for the industry. This expected growth will be driven by intrinsic demand, which should increase as OEMs work to improve the demand profile in the country . Mint.
In response to sluggish demand, many automakers have introduced discounts in an attempt to stimulate the market. However, Chandra cautions against seeing this as a long-term shift in consumer behavior. “Manufacturers have a tactical strategy to launch more attractive models in lower variants, but I won’t delve into that. It’s more about demand activation rather than a permanent trend,” he told Mint.
Electric vehicles bear brunt of sluggish demand
Customers are also delaying purchases of internal combustion engine and electric vehicles because they expect better options or better prices. However, Chandra explained that the impact of sluggish demand in the electric vehicle market, being a new technology segment, is worsening as customers slow down decision-making, especially as government subsidies are tapered.
“The biggest barriers to EV adoption — price, range and charging infrastructure — are improving, but the latter remains a challenge,” said Chandra. “Government focus on investment in charging infrastructure is critical to driving growth in this area,” he said. $2,000 crore to set up 22,000 four-wheeler charging stations.
However, while passenger vehicle sales were sluggish in the first half of the fiscal, segments such as two-wheelers and three-wheelers performed much better. In the first half of fiscal year 2025, two-wheeler sales increased by 16.5% to 10.1 million units, and three-wheeler sales were 374,000 units, an increase of nearly 10% from the same period last year, hitting the highest level in history during the same period.
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