Overall performance across the auto sector remained subdued, as the Society of Indian Automobile Manufacturers (SIAM) in its latest report has said that domestic passenger vehicle sales fell 1.4 per cent to 10,11,882 units in the first quarter of this fiscal (Q1 FY26) from 10,26,006 in the corresponding quarter of last fiscal. According to the report, total two-wheelers sales also fell by 6.2 per cent to 46,74,562 units during the April-June quarter of FY26 as compared to 49,85,631 units in the period a year earlier. The commercial vehicle (CV) saw a marginal 0.6 per cent fall in sales to 2,23,215 units in the June quarter of the current fiscal from 2,24,575 units in the first quarter of the previous fiscal.

On the export front, passenger vehicles saw their highest ever exports in the quarter under review with 2.04 lakh units, registering a growth of 13.2 per cent over the same quarter last year. Meanwhile, SIAM said that looking ahead to Q2, the overall industry outlook remains cautiously optimistic. While the challenges from the first quarter may continue to linger in the near term, several positive macroeconomic and seasonal indicators could support a gradual recovery. The upcoming festive season typically serves as a demand driver, particularly for PVs and two-wheelers, and could help uplift consumer sentiments.

SIAM also said that an above-normal monsoon is likely to aid rural income recovery, which is especially important for two-wheelers and entry-level vehicles that rely heavily on rural demand, adding that the RBI's cumulative repo rate cuts of 100 basis points over the past six months are expected to gradually ease borrowing costs which could positively impact the auto sector by improving affordability and boosting consumer sentiment in the coming months. However, supply-side challenges, especially the recent export licensing requirement from China on rare earth magnets, have been a concern for OEMs of all categories.