Tariff, geopolitics, India-Pak conflict impacting auto demand

Passenger vehicle wholesales (dispatches to dealers) in the domestic market declined by 6.4 per cent y-o-y to around 3.20 lakh units in June as compared with 3.42 lakh units in June 2024,
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BABU

Geopolitical tensions, the India-Pakistan conflict, and continuing uncertainty over tariffs are impacting passenger vehicle demand and consumer sentiments in the Indian automobile segment. 

According to automobile dealers despite a decrease in the lending rates and reduction in EMIs, there has been no substantial increase in consumer sentiment with regard to purchase of cars.

“The tariff disturbed the domestic automobile market. The sales numbers are being worked out but it appears not to be a steady month. We are yet to see a direct impact of the lowering of income tax, however with the stock markets doing well we are hopeful that the sentiments will soon pick up and translate into an increase in sales,” C S Vigneshwar, Federation of Automobile Dealers Association (FADA) President, told businessline.

Passenger vehicle (PV) wholesales (dispatches to dealers) in the domestic market declined by 6.4 per cent year-on-year (y-o-y) to around 3.20 lakh units in June as compared with 3.42 lakh units in June 2024, according to industry sources.

Maruti Suzuki India reported a decline of 13.30 per cent in domestic dispatches to 1,18,906 units in June as compared with 1,37,160 units in the same month last year.

The erratic weather, and the outbreak of hostilities between India and Pakistan earlier this year also hurt sentiment, industry officials said.

“The conflict situation between India and Pakistan impacted the automobile industry with many consumers cancelling their bookings. The sentiments are also dampened due to extreme heat, early and late rainfall in areas across the country. Overall, this year will be a tough year for the industry,” said Manish Raj Singhania, Chairman, of Research & Academy, FADA.

Festive season

Dealers are expecting the passenger vehicle sales to pick up in the festive season. 

“The decrease in sales is not happening at an alarming rate. We are anticipating with good monsoons that the demand in passenger vehicles will pick up during the festive season,” said Rajesh Mehta, a Maharashtra-based automobile dealer. 

Analysts have flagged production risks due to continuing rare earth import restrictions from China. The impact of this has already been seen in the June sales of Bajaj Auto and TVS Motors. ICE models could also be affected after July, Nomura said in a note.

Published on July 2, 2025