The Indian automobile industry displayed a mixed performance in May 2025, with strong SUV demand and surging exports supporting sales growth across several top manufacturers. However, sluggish passenger car sales, especially in the small and compact segments, continued to pose challenges. The latest data points to strategic shifts among original equipment manufacturers (OEMs) toward more resilient and higher-margin categories like utility vehicles, electric vehicles (EVs), and overseas markets.

Maruti Suzuki: Domestic Slowdown Offsets Export Gains

India’s largest carmaker, Maruti Suzuki, reported a 5.6% YoY decline in domestic passenger vehicle (PV) sales, amounting to 1.36 lakh units in May. The steep fall in the mini and compact car segment, which includes popular models like the Alto, Swift, Baleno, and WagonR, highlighted the weakening demand for entry-level cars, especially in urban centers.

Despite this domestic drag, Maruti’s utility vehicle sales grew 1.3% YoY, supported by consistent performance from models like the Brezza and Grand Vitara. The most notable highlight was the sharp 80% increase in exports, with 31,219 units shipped overseas, up from 17,367 units a year ago. This helped Maruti achieve total sales of 1.80 lakh units, representing a 3.2% YoY increase, largely powered by its export momentum.

Mahindra & Mahindra: Riding the SUV Wave

Mahindra & Mahindra (M&M) continued its strong run in the utility vehicle segment, with a 21% YoY growth in domestic SUV sales at 52,431 units in May. Total monthly sales stood at 84,110 units, reflecting a 17% YoY increase. The company's YTD SUV growth stood at an impressive 24%, reinforcing its leadership in the SUV category.

The company also saw a 14% rise in Light Commercial Vehicle (LCV) sales, especially in the 2–3.5-tonne segment. Moreover, exports grew 37% YoY in May, further cushioning the domestic market volatility.

CEO Nalinikanth Gollagunta noted the strong month for both SUVs and LCVs and highlighted expectations of mid-to-high teens growth in SUV volumes for FY26. He confirmed that EV production remains on track, with full capacity utilisation expected soon. M&M also passed on input cost hikes due to rising steel prices, and it has managed to secure rare-earth magnet supplies—an essential component for EVs—amid global concerns.

Hero MotoCorp: Reclaims Top Spot in Two-Wheelers

After a soft April, Hero MotoCorp bounced back by selling 5.08 lakh two-wheelers in May, reclaiming the top position in the two-wheeler segment. The recovery was fuelled by renewed demand in the 100–125cc commuter motorcycle category, which had earlier suffered from subdued rural and semi-urban sentiment.

The company had paused production briefly in April to address high dealership inventory and conduct factory maintenance, and this strategy appears to have paid off. The return of demand, particularly in lower-displacement segments, bodes well for the company’s performance in the coming months.

TVS Motor: Stellar Growth with Electrification Focus

TVS Motor Company posted 17% YoY growth in overall sales, totaling 4.31 lakh units in May. Notably, electric two-wheeler (E2W) sales jumped 50% YoY to 27,976 units, underlining its strong position in the growing EV market.

TVS also recorded 22% growth in motorcycle sales and 15% growth in scooter sales. Export volumes rose by 22%, reaching 1.18 lakh units, driven by a 21% increase in two-wheeler exports.

However, the company issued a cautionary note regarding the China-imposed curbs on rare earth magnet exports—a key material in EV motors. Sudarshan Venu, Managing Director of TVS, warned that production disruptions could begin as early as June or July, as most rare earth magnets are sourced from China. These magnets are critical for motor performance, and any supply chain disruption could impact EV output schedules.

Bajaj Auto: Strong Exports Offset Domestic Caution

Bajaj Auto registered an 8% YoY growth in two-wheeler sales, reaching 3.85 lakh units, with its commercial vehicle (CV) segment growing 5% YoY. Notably, exports rose by 22%, helping the company post 7.5 lakh total sales over April and May combined.

Despite the positive momentum, the company remains wary of geopolitical headwinds, especially those affecting EV component supply chains. Executive Director Rakesh Sharma flagged potential disruptions in rare-earth magnet availability, echoing concerns raised by TVS and M&M.

Ashok Leyland: M&HCV Strength Offsets LCV Weakness

Ashok Leyland, one of India’s leading commercial vehicle manufacturers, reported a 5% YoY growth in overall sales, reaching 15,484 units in May. The medium and heavy commercial vehicle (M&HCV) segment showed robust 11% YoY growth, a positive sign for sectors like infrastructure, logistics, and mining.

However, the company continued to struggle in the light commercial vehicle (LCV) segment, which saw a 4% YoY decline. While Ashok Leyland is well-positioned to benefit from India’s infrastructure push, it faces stiff competition and slowing demand in the sub-2T category.

Key Takeaways from May Auto Sales Data

• SUVs remain the strongest pillar of growth for the auto industry, with both M&M and Maruti focusing heavily on this segment.

• Export markets are becoming increasingly critical, especially for Maruti, TVS, and Bajaj, helping companies reduce dependence on the cyclical domestic market.

• Electric vehicle momentum continues, but supply-side risks loom large, with rare-earth magnet shortages threatening to impact production schedules from June onwards.

Industry Outlook: Balancing Growth with Risk

The May auto sales report confirms that India’s auto OEMs are adapting fast to changing market conditions. While entry-level car demand remains soft, especially in urban areas, companies are increasingly investing in premium categories, international markets, and EVs.

However, inventory overhang, uncertainties in rural demand, and input cost inflation could weigh on volumes in the near term. Supply chain risks, particularly related to rare earth materials, will be critical to monitor, as their impact could ripple through the EV ecosystem in the coming quarters.

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