Automobile Industry is Navigating a Cautious Festive Season

The Indian automobile market is poised for its most crucial period, the festive season, which traditionally accounts for a significant chunk of annual sales. However, this year of 2025 presents a unique blend of cautious consumer sentiment, shifting market dynamics, and a potential game-changer in the form of a GST reform. Statistical data from recent months paints a picture of a sector with subdued domestic demand but strong export performance, setting the stage for a festive season that is both hopeful and uncertain.

 

A Slow Start to the Fiscal Year

 

The first quarter of the fiscal year 2025-26 has been marked by a noticeable slowdown in domestic automobile sales. According to data from the Society of Indian Automobile Manufacturers (SIAM) and the Federation of Automobile Dealers Associations (FADA), wholesale dispatches and retail registrations have shown a mixed to negative trend.

 

Passenger Vehicles: In July 2025, passenger vehicle (PV) sales dipped by a marginal 0.2% year-on-year, according to SIAM data. FADA's retail sales data shows an even steeper decline of 0.81% in the same period. This indicates that while manufacturers are trying to push stock to dealerships, actual consumer purchases are not keeping pace, leading to a high inventory level of around 55 days at dealerships. The Society of Indian Automobile Manufacturers (SIAM) has also noted that while overall PV sales are down, the share of Utility Vehicles (UVs) in the segment has grown to 66%, highlighting a strong consumer preference for SUVs.

 

Two-Wheelers: The two-wheeler segment, a key indicator of rural and entry-level urban demand, has remained largely stagnant. Retail sales in July 2025 saw a marginal increase of only 0.8%, as per FADA. This segment's performance has been hampered by sluggish rural demand, which has yet to fully recover from monsoon uncertainties and concerns over agricultural income.

 

Exports - The Silver Lining: Despite the domestic headwinds, Indian automakers have found a significant growth engine in exports. In July 2025, PV exports surged by 8.7%, while two-wheeler exports grew a robust 33.5%. This underscores India's rising manufacturing competitiveness and demand from international markets.

 

What Can Indian Customers Expect This Festive Season?

 

With a subdued first half of the year, automakers are pinning their hopes on the festive season to turn the tide. Here’s what a customer can anticipate:

 

1.  Aggressive Deals and Discounts: With dealerships holding a high inventory of unsold cars, manufacturers are expected to roll out attractive discounts and promotional schemes to clear stock. This will likely include cash discounts, exchange bonuses, and special financing offers with low interest rates.

 

2.  New Model Launches to Drive Excitement: The festive season is a traditional time for new product introductions, and this year is no different. A host of new and updated models are slated for launch, targeting various segments.

 

SUVs: The SUV segment remains the growth driver. Customers can expect new models like the Maruti Escudo (a new 5-seater SUV to rival Hyundai Creta), Mahindra XUV 3XO EV, and the updated Tata Punch Facelift and Renault Kiger Facelift.

 

EVs: Electric vehicles are gaining traction. New EV launches, such as the Maruti e Vitara, VinFast VF6, and Hyundai Ioniq 5 facelift, will give customers more options and are expected to be supported by state-level incentives.

 

Others: Other notable launches include the new-gen Hyundai Venue and the seven-seater Volkswagen Tayron, catering to the growing demand for spacious family vehicles.

 

3.  Potential GST Rate Revision: A significant factor influencing customer sentiment is the potential for a Goods and Services Tax (GST) rate cut. The government has reportedly circulated a draft of a new two-tier GST structure. If this is implemented before Diwali, as speculated, it could make small cars and two-wheelers more affordable, providing a major boost to demand. However, this uncertainty is also causing some customers to delay their purchases, awaiting a definitive announcement.

 

4.  A Shift Towards Premium and Technology-Rich Models: Data from the first quarter of FY26 shows a decline in entry-level car sales while the UV segment, which includes premium and feature-rich models, continues to grow. This indicates a consumer preference for aspirational, high-value models. Customers will likely find automakers pushing their top-end variants and focusing on features like advanced driver-assistance systems (ADAS), connected car technology, and panoramic sunroofs.

 

To sum it all up, the festive season in the Indian automobile market is a high-stakes affair. While the industry has had a slow start to the year, a combination of pent-up demand, aggressive marketing by automakers, and a series of exciting new launches could trigger a sales surge. The ultimate success, however, may depend on external factors like the recovery of rural income and, most importantly, the outcome of the proposed GST reforms.

—------------------------------------------------------------------------------------------------------------------------

For such informative articles or building your brand value, allow us to help you forge deeper connections with your brand and people! Let’s connect -  

 

contact@upshotbrandmedia.com  / 8962429492