Passenger Vehicle Sales in India Drop 13.6% in May Amid Geopolitical Strain and Weak Consumer Confidence
New Delhi, June 26, 2025 – Retail sales of passenger vehicles (PVs) in India registered a sharp 13.6% decline in May 2025, as consumer sentiment remained dampened following rising geopolitical unrest, particularly in the aftermath of renewed tensions between India and Pakistan. The data was revealed in a recent analysis by ICRA, a prominent credit rating and research firm.
According to the report, PV sales dropped from 349,939 units in April 2025 to just 302,214 units in May, highlighting the impact of external shocks on discretionary consumer spending. The automobile sector, often viewed as a barometer of economic health, has struggled to maintain momentum despite attractive discounts and promotions from automakers aimed at stimulating demand.
ICRA noted that the prevailing uncertainty in northern India, triggered by cross-border conflict, has adversely influenced buyer confidence, leading to a reluctance among consumers to make big-ticket purchases like cars.
In contrast, the two-wheeler segment demonstrated notable resilience. The sector posted a healthy 7% year-on-year growth in retail volumes, buoyed by strong rural demand. Experts attribute this positive trend to favorable agricultural income and a productive harvest season, which helped sustain purchasing power in non-urban regions.
Interestingly, despite the sharp drop in retail PV sales, wholesale dispatches by manufacturers remained steady at around 3.4 lakh units in May. This disconnect suggests that carmakers are maintaining production levels, possibly anticipating a rebound in demand or experiencing a lag between retail performance and wholesale planning. It may also point to inventory accumulation at the dealer level.
The current landscape reflects the automotive industry’s vulnerability to political instability and shifting consumer sentiment. As manufacturers and stakeholders navigate these uncertainties, future sales performance will depend heavily on geopolitical developments and macroeconomic recovery.
