Indian Car Sales Drop 6.4% in June 2025: Maruti, Hyundai, and Tata Motors Face Major Setback
The Indian passenger vehicle market experienced a significant downturn in June 2025, with domestic sales declining by 6.4% year-on-year to 3,20,277 units compared to 3,42,174 units in June 2024. This unexpected drop has affected major automakers across the board, highlighting growing challenges in the automotive sector.
Overall Market Performance Shows Concerning Trends
The passenger vehicle industry's underwhelming performance in June 2025 reflects broader economic headwinds and changing consumer preferences. The 6.4% decline in wholesale volumes represents one of the more significant drops in recent months, raising concerns about the sector's near-term outlook.
Industry experts attribute this decline primarily to subdued demand in the smaller car segment, which has traditionally been a volume driver for the Indian automotive market. The shift away from entry-level vehicles signals deeper affordability challenges facing Indian consumers.
Maruti Suzuki Faces Steepest Decline
India's largest carmaker, Maruti Suzuki, recorded the steepest fall among major manufacturers with sales dropping 13.3% year-on-year to 1,18,906 units in June 2025, down from 1,37,160 units in the same period last year.
The company's struggles are particularly evident in the entry-level segment. Models like the Alto and S-Presso contributed only 6,414 units, representing just 5.4% of Maruti's domestic passenger vehicle wholesale volumes during the month.
According to Maruti executives, the entry-level car segment has experienced dramatic changes since 2019. Entry-level vehicle prices have surged by over 70% due to stricter regulatory requirements, while sales of smaller cars have plummeted by more than 70% during the same period.
Mahindra Emerges As The Bright Spot
Contrasting the overall market decline, Mahindra & Mahindra achieved impressive growth with sales rising 18.2% year-on-year to 47,306 units in June 2025, up from 40,022 units in June 2024.
This marked the third consecutive month where Mahindra outperformed both Hyundai Motor India and Tata Motors in domestic passenger vehicle wholesale numbers. The company's success stems from sustained demand for popular SUV models including:
- Scorpio-N
- XUV 3XO
- Bolero Neo
- Thar Roxx
Hyundai and Tata Motors Struggle With Double-Digit Declines
Hyundai Motor India witnessed a significant 12.1% year-on-year drop in domestic sales to 44,024 units in June 2025, compared to 50,103 units in June 2024. Company officials attributed this decline to ongoing geopolitical tensions affecting market sentiment.
The Korean automaker remains cautiously optimistic about recovery prospects, particularly with the upcoming production commencement at its Talegaon plant in Pune during Q3 FY26. Management expects gradual demand recovery supported by potential repo rate reductions and improved market liquidity.
Tata Motors experienced an even steeper decline with passenger vehicle sales falling 14.8% year-on-year to 37,083 units in June 2025, down from 43,524 units in the previous year. The company acknowledged volume pressures throughout Q1 FY26, particularly during May and June.
Toyota Maintains Stability Amid Market Turbulence
Toyota Kirloskar Motor demonstrated resilience with a modest 2.7% year-on-year increase in volumes to 26,453 units in June 2025, up from 25,752 units in June 2024. This growth was primarily driven by sustained demand for badge-engineered models.
Market Dynamics and Future Outlook
Despite declining volumes, industry analysts note that the overall market value continues growing steadily. This apparent contradiction reflects a significant consumer shift toward higher-end, feature-rich vehicles that command premium pricing.
The trend indicates evolving consumer preferences favoring comfort, advanced technology, and brand value over basic transportation needs. This premiumization trend partially offsets volume declines through improved revenue per unit.
Rural Market Offers Hope for Recovery
While urban markets face saturation and macroeconomic headwinds, rural demand presents more optimistic prospects. Better-than-expected monsoon conditions typically translate to improved agricultural income and enhanced rural spending capacity.
Industry experts expect volume trends to remain stable over the next two to three quarters, with limited upside potential in urban markets. However, positive rural sentiment could provide crucial support for overall demand recovery in coming months.
Supply Chain Challenges on the Horizon
Although June 2025 production remained unaffected, the automotive industry faces potential disruption from rare earth magnet shortages. Following export restrictions imposed by China, industry inventories may run dry by mid-July 2025.
This shortage particularly threatens electric vehicle production, as electric cars require 1.5 to 3 kilograms of rare earth magnets compared to just 100 grams needed for traditional internal combustion engine vehicles. Automakers are actively exploring alternative sourcing options to mitigate this risk.
The June 2025 sales data underscores the challenges facing India's passenger vehicle market, with affordability concerns and changing consumer preferences reshaping industry dynamics. While premium segments show resilience, the traditional volume drivers continue struggling, requiring strategic adaptations from manufacturers.
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