The deceleration was influenced by multiple factors, including subdued consumer confidence, constrained cash flow, rising costs, and the impact of a high base effect. Additionally, many potential buyers postponed their purchases in anticipation of new electric vehicle (EV) launches.

Projections for FY26 indicate that the slowdown is likely to persist, with only single-digit growth expected. The market had witnessed a strong post-pandemic recovery in FY24, but concerns about an economic slowdown have started affecting consumer sentiment, leading to more cautious spending patterns.

The passenger vehicle and three-wheeler segments recorded growth below the industry average. The three-wheeler segment expanded by 4.3 per cent, reaching 1.22 million units from 1.17 million, while the passenger vehicle segment grew by 4.5 per cent, increasing from 3.9 million units to 4.1 million.

In contrast, the two-wheeler segment played a key role in driving industry growth, registering a 7 per cent increase. Sales in this category rose from 17.6 million to 18.8 million units in FY25.

The reported figures do not include data from Telangana and Lakshadweep.

News source: Business Standard