PV Sales To Improve In June: FADA President After tepid PV sales in May, the month of June will be favourable on the back of good monsoon and ease of borrowing cost

According to recent data released by Federation of Automobile Dealers Associations (FADA), passenger vehicle (PV) retails contracted by 3.1 percent year on year (YoY) in May 2025. Entry-level models were hardest hit as constrained financing and subdued consumer sentiment compounded the slowdown. Heightened war related tensions in Jammu & Kashmir, Punjab, Rajasthan, and Gujarat further prompted buyers to delay purchases. Inventory days—which had hovered around 50—have edged up to approximately 52–53 days. However, the month of June will be favourable on the back of good monsoon and ease of borrowing cost. Moving forward, OEMs must adopt a cautious, ground-reality-aligned approach to production planning and channel incentives.

"The industry has faced issues regarding the availability of finance. Banks were slower to disburse loans and customers were taking a little bit longer because of the discretionary spending coming down due to stock market volatility. But we've seen that towards the end of the month, the stock market started to do better, so we are expecting June to be good. The bank rates have been reduced today, and this coupled with three last good monsoon showers will make June better," FADA President C S Vigneshwar told BIZ Experiences India.

The 55th RBI Monetary Policy Committee meeting, where the RBI announced its decision to reduce policy rates will have a positive impact on automobile industry. "The rate cut will serve as a positive catalyst for consumption and investment, particularly in interest-sensitive sectors such as automobiles and it will also ease borrowing costs, improve liquidity, and further strengthen the momentum behind India's infrastructure and manufacturing push," said Dr. Anish Shah, Group CEO & MD, Mahindra Group.

A widely anticipated 25 bp repo‐rate reduction in early June will continue to ease borrowing costs for both dealerships and end customers, while recent fiscal measures—such as the 3 percent MSP hike on kharif crops—are poised to amplify agricultural cash flows. However, global supply‐chain headwinds—from rare‐earth constraints in EV components to ongoing geopolitical tensions—may keep urban consumer sentiment in check. PV channels will have to contend with elevated inventory, legacy product portfolios, and tepid retail conversions despite micro-market Rath Yatra upticks.

For the first time ever, penetration of EVs in the passenger vehicle segment has grown to 4.07 percent. Earlier the percentage was between 2 to 2.8 percent. "More manufacturers coming out with EVs have led to a positive trend. Not only OEMs are coming out with EVs, the fact they're able to supply these EVs from the factories in good numbers has certainly helped. We need to have a bouquet of fuels, such as CNG, hybrid diesels, petrol, Ethanol, and perhaps also hydrogen, but EV is also gonna play a major role in the energy independence of our country," Vigneshwar added.

Furthermore, CAFE or Corporate Average Fuel Efficiency norms in India will play a role: These are regulations that set standards for the average fuel efficiency of passenger vehicles sold by car manufacturers. These norms aim to improve fuel efficiency and reduce carbon emissions. They apply to all vehicles sold by a manufacturer in a fiscal year. Government wants companies to abide by these norms in order to cut emission by 30 percent. But this is not without challenges. "The CAFE norms do have an impact on the price of a vehicle which the government needs to consider. There is a requirement of balance as customers might not be able to afford a fully loaded vehicle in terms of environmental norms," he added.