Posted on 18 Jul 2025
India’s automotive industry saw flat year-on-year sales in the April-June quarter of the 2026 fiscal year (FY26), as weak domestic demand was offset by strong growth in exports and utility vehicle (UV) sales, according to Society of Indian Automobile Manufacturers (SIAM) data.
Passenger vehicle (PV) sales fell 1.4% y-o-y, mainly due to an 11% drop in car sales. However, UVs continued to perform well, rising nearly 4% and now accounting for 66% of all PV sales. Two-wheeler and commercial vehicle sales also declined, while three-wheelers remained stable, notes Kallanish.
Meanwhile, exports provided crucial support. Total vehicle exports rose over 22%, led by strong demand from Latin America, the Middle East, and Asia.
However, the industry now faces a supply threat. Over 30 applications for rare earth magnet imports from China are still awaiting approval by China’s Ministry of Commerce. Original equipment manufacturers – OEMs – warn that magnet inventory could run out by mid-July, affecting production.
Electric vehicles and hybrids, which use permanent magnet motors, are most exposed. But even conventional vehicles could be impacted, as magnets are used in systems like power steering and wipers. While some automakers have buffer stock, others may be forced to halt production if the issue continues.
To cope, manufacturers are exploring short-term fixes, such as importing assembled motors or using alternative materials. The Indian government is working to fast-track clearances and encourage local magnet production.
Maruti has already cut its popular electric SUV, e-VITARA production targets sharply, while Bajaj has warned of possible wider disruptions if the bottleneck persists.
Source:Kallanish
