The Indian automotive sector demonstrated mixed performance in February 2025, with passenger vehicle wholesales showing modest growth while two-wheeler sales experienced a significant decline. According to the latest industry data, passenger vehicle wholesales increased by 2% year-on-year (YoY), while two-wheeler sales dropped by 9% compared to February 2024. These divergent trends highlight the complex dynamics at play in India’s automotive market and offer insights into both consumer behavior and broader economic patterns.
Passenger Vehicle Market Shows Resilience
The 2% growth in passenger vehicle wholesales represents a continuation of the sector’s steady performance amidst challenging economic conditions. Industry analysts attribute this resilience to several factors, including continued demand for personal mobility, new model launches, and improved supply chain conditions compared to previous years.
“The passenger vehicle segment has maintained positive momentum despite inflationary pressures and high interest rates,” said a senior automotive industry analyst. “This suggests that consumer confidence remains relatively strong in the middle and upper-income segments that typically purchase passenger vehicles.”
The growth, while modest, is particularly noteworthy given the high base effect from February 2024, when the industry was experiencing strong post-pandemic recovery. Major manufacturers reported varied performances, with some domestic players outperforming their international counterparts.
SUVs continued to dominate the passenger vehicle landscape, accounting for nearly 50% of all passenger vehicles sold. Compact SUVs remained the fastest-growing sub-segment, reflecting consumer preference for vehicles that offer utility, status, and relatively better fuel efficiency compared to larger SUVs.
Electric passenger vehicles showed significant growth, albeit from a small base, with sales increasing by approximately 30% year-on-year. This growth was supported by expanded model offerings, improved charging infrastructure, and continued government incentives for electric vehicle adoption.
Industry experts note that the semiconductor shortage, which had severely impacted production in previous years, has largely been resolved, allowing manufacturers to better meet consumer demand. Waiting periods for popular models have decreased substantially compared to the peak of the supply chain crisis.
Two-Wheeler Segment Faces Challenges
In stark contrast to the passenger vehicle market, the two-wheeler segment experienced a substantial 9% decline in February 2025 compared to the same month last year. This contraction reflects several challenges facing the sector, which serves as a critical indicator of rural economic health and mass-market consumer sentiment.
“The two-wheeler market contraction is concerning as it typically reflects stress in rural economies and among lower-middle-income urban consumers,” explained an industry expert. “These demographics are more sensitive to inflation, fuel prices, and overall economic uncertainty.”
Rural demand, which accounts for approximately 50% of two-wheeler sales in India, has been particularly affected by uneven agricultural performance and weather-related disruptions in several regions. Delayed payments from government subsidy programs and relatively lower crop prices in some areas have reduced disposable income in rural households.
Urban two-wheeler sales have also been impacted by the continuing shift toward ride-sharing services and improved public transportation options in major cities. Additionally, the rapid expansion of metro networks in several tier-1 and tier-2 cities has provided affordable alternatives to two-wheeler ownership for many commuters.
Entry-level motorcycles, which constitute the largest segment of the two-wheeler market, saw the steepest decline at approximately 12% year-on-year. Premium motorcycles (250cc and above) performed better, showing a modest decline of about 3%, indicating that higher-income consumers remained relatively insulated from economic pressures.
Scooters, which typically perform better in urban markets, showed a smaller decline of about 6% compared to motorcycles. Electric two-wheelers were the only bright spot in the segment, registering growth of approximately 20% year-on-year, though they still represent less than 5% of total two-wheeler sales.
Manufacturer Performance and Market Dynamics
Among passenger vehicle manufacturers, market leader Maruti Suzuki reported a 3% increase in wholesales, slightly outperforming the overall market. Hyundai Motor India and Tata Motors reported growth of 2.5% and 4% respectively, while Mahindra & Mahindra continued its strong performance with approximately 6% growth, driven by its popular SUV lineup.
In the two-wheeler segment, market leader Hero MotoCorp reported a decline of approximately 10% in February, slightly worse than the industry average. Honda Motorcycle & Scooter India (HMSI) performed marginally better with an 8% decline, while TVS Motor Company and Bajaj Auto reported declines of 7% and 9% respectively.
Royal Enfield, which operates primarily in the premium motorcycle segment, showed more resilience with a smaller decline of about 4%, consistent with the better performance of the premium two-wheeler market. Electric two-wheeler manufacturers like Ola Electric, Ather Energy, and TVS Motor’s electric division reported growth, bucking the overall negative trend in the two-wheeler segment.
“The divergent performance across price segments and powertrains indicates a market where consumer preferences are increasingly stratified by income levels,” noted an industry analyst. “Premium segments in both passenger vehicles and two-wheelers are showing more resilience, while mass-market products face greater challenges.”
Economic Factors and Market Outlook
Several macroeconomic factors have contributed to the current market dynamics. Persistent inflation, though moderating, has eroded purchasing power, particularly affecting price-sensitive segments like entry-level two-wheelers. The Reserve Bank of India’s continued high interest rate policy has increased the cost of vehicle financing, further impacting affordability.
Fuel prices, which remain relatively high despite some global oil price moderation, have influenced consumer purchase decisions. This factor has contributed to the growing interest in electric vehicles across both passenger and two-wheeler segments, despite their higher upfront costs.
Looking ahead, industry experts offer cautiously optimistic projections for the passenger vehicle market, with expectations of 3-5% growth for the full fiscal year 2025-26. The outlook for the two-wheeler segment remains more challenging, with recovery dependent on improvements in rural income, moderation in inflation, and potential interest rate cuts later in the year.
“We expect the passenger vehicle growth trajectory to continue, supported by new model launches and relatively stable urban incomes,” said a senior executive at a leading automotive manufacturer. “The two-wheeler segment may see recovery in the second half of the fiscal year if monsoon performance is good and rural incomes improve.”
Government policies will play a crucial role in shaping market dynamics. The continued implementation of the Production Linked Incentive (PLI) scheme for the automotive sector, along with incentives for electric vehicle adoption, could provide additional support to the industry. However, regulatory changes related to emissions standards and safety features may add to vehicle costs, potentially impacting demand in price-sensitive segments.
Supply Chain and Manufacturing Trends
The automotive supply chain, which had faced significant disruptions in recent years due to the pandemic, semiconductor shortages, and geopolitical tensions, has largely stabilized. This has allowed manufacturers to better align production with demand and reduce waiting periods for popular models.
“The supply situation has improved considerably compared to the challenges we faced in 2022-23,” explained a senior supply chain executive from a major automotive manufacturer. “However, we continue to monitor global developments, particularly in semiconductor availability and raw material costs.”
Manufacturing capacity utilization showed divergent trends, mirroring sales patterns. Passenger vehicle manufacturing plants operated at approximately 75-80% capacity, while two-wheeler facilities reduced production to manage inventory levels, operating at about 65-70% capacity on average.
Several manufacturers have announced adjustments to their production schedules for the coming months, with increased focus on passenger vehicles and electric models, while scaling back production of entry-level two-wheelers in response to market conditions. This strategic reallocation of resources reflects companies’ efforts to align with changing consumer preferences and market realities.
Inventory Management and Dealer Perspectives
Dealer inventory levels have become a point of concern, particularly in the two-wheeler segment. Average two-wheeler inventory at dealerships has increased to approximately 45-50 days, significantly higher than the ideal range of 30-35 days. This inventory buildup has put pressure on dealers’ working capital and prompted manufacturers to offer additional support through extended credit periods and enhanced marketing support.
“The inventory situation is challenging, especially for two-wheeler dealers in rural areas,” said the president of a national automobile dealers association. “We’re working closely with manufacturers to manage stock levels and implement targeted promotional activities to stimulate demand.”
Passenger vehicle dealers reported healthier inventory levels of approximately 30-35 days on average, though with significant variations across regions and specific models. SUVs and compact SUVs continued to see stronger demand, with some popular models still commanding waiting periods of 4-6 weeks.
Dealers have reported increasing consumer interest in vehicle features related to safety, connectivity, and fuel efficiency. This trend has favored manufacturers who have invested in these areas and has supported sales in the mid and premium segments of both passenger vehicles and two-wheelers.
Regional Variations in Sales Performance
Sales performance showed significant regional variations, reflecting diverse economic conditions across India. Western and southern states generally outperformed northern and eastern regions in passenger vehicle sales, with Maharashtra, Karnataka, and Gujarat showing above-average growth.
Two-wheeler sales declined across all major regions, though the extent of contraction varied considerably. States with higher agricultural dependency, such as Uttar Pradesh, Bihar, and Madhya Pradesh, experienced steeper declines of 12-15% in two-wheeler sales, reflecting challenges in rural economies.
Urban centers continued to show stronger performance in both segments compared to rural areas, though the gap was more pronounced in the two-wheeler category. Tier-2 and tier-3 cities demonstrated relatively better growth in passenger vehicle sales compared to metropolitan areas, suggesting a gradual deepening of the market beyond major urban centers.
“The regional variations highlight the uneven nature of economic recovery and disposable income growth across India,” noted an economist specializing in the automotive sector. “These patterns also reflect infrastructural differences, with better road networks and fuel availability supporting stronger automotive sales in certain regions.”
Export Performance and Global Market Dynamics
Indian automotive exports showed mixed performance in February 2025. Passenger vehicle exports increased by approximately 5% year-on-year, outperforming domestic sales growth. Key export markets included Latin America, Africa, and parts of Southeast Asia.
Two-wheeler exports declined by about 7%, though this was less severe than the domestic sales contraction. Traditional export markets in South Asia, Africa, and Latin America continued to absorb significant volumes, though increasing competition from Chinese manufacturers has created challenges in some markets.
“Export markets have become increasingly important for Indian manufacturers seeking to diversify their revenue streams and reduce dependence on domestic market fluctuations,” explained an automotive industry consultant. “However, global economic uncertainty and increasing trade protectionism in some markets present ongoing challenges.”
Global supply chain realignments following geopolitical tensions have created both opportunities and challenges for Indian automotive manufacturers. While some have benefited from the “China plus one” strategy adopted by global companies, others have faced increased competition in international markets.
Technological Trends and Consumer Preferences
The sales data from February 2025 reflects evolving technological trends and consumer preferences in the Indian automotive market. Connected car features, advanced driver assistance systems (ADAS), and enhanced infotainment options have become increasingly important purchase considerations, particularly in the mid and premium segments of the passenger vehicle market.
Electric vehicles continued to gain market share, with battery electric vehicles (BEVs) accounting for approximately 5% of passenger vehicle sales and 4% of two-wheeler sales in February 2025. Hybrid vehicles also showed strong growth, particularly in the passenger vehicle segment, offering consumers a transitional option between traditional internal combustion engines and fully electric powertrains.
“Consumer preferences are evolving rapidly, with increasing emphasis on technology, sustainability, and overall ownership experience rather than just upfront cost,” said the marketing director of a leading automotive company. “This shift is particularly evident among younger buyers and in urban markets.”
Digital sales channels continued to gain importance, with approximately 30% of vehicle purchases now involving significant online research and engagement before the final purchase decision. Several manufacturers have invested in enhancing their digital platforms to provide immersive virtual experiences and streamlined purchase processes.
Conclusion and Future Outlook
The February 2025 wholesales data presents a nuanced picture of India’s automotive market, with passenger vehicles demonstrating resilience while the two-wheeler segment faces significant challenges. These contrasting trends reflect broader economic patterns, with different consumer segments experiencing varying levels of financial pressure and confidence.
Industry experts anticipate that the divergence between these segments may continue in the near term, with potential convergence toward positive growth across categories in the second half of the fiscal year, contingent on favorable monsoon performance, inflation moderation, and potential interest rate reductions.
“The automotive industry is navigating a complex landscape of economic pressures, technological transitions, and evolving consumer preferences,” concluded an industry association spokesperson. “While challenges persist, particularly in the two-wheeler segment, the long-term growth trajectory for the Indian automotive market remains positive, supported by favorable demographics, increasing urbanization, and the ongoing expansion of the middle class.”
As the industry progresses through 2025, manufacturers are likely to focus on strategic product planning, cost optimization, and technological innovation to address segment-specific challenges while capitalizing on emerging opportunities in electric mobility and premium vehicle categories. The market’s performance in the coming months will provide clearer indications of whether the current divergent trends represent a temporary phase or a more fundamental shift in India’s automotive landscape.
