India’s automotive industry is experiencing a robust demand surge, with passenger vehicle bookings rising 11% year-over-year, according to the Federation of Automobile Dealers Associations (FADA).
Reported on June 14, 2025, this growth follows a February interest rate cut by the Reserve Bank of India, which has bolstered consumer sentiment. Entry-level cars, tractors, and two-wheelers are driving the uptick, reflecting strong rural and urban demand.
Maruti Suzuki, India’s leading automaker, has seen significant interest in its internal combustion and hybrid models, though its e-Vitara EV production faces challenges due to rare earth shortages.
Hero MotoCorp and Mahindra & Mahindra also reported strong sales, with two-wheeler and tractor bookings up 15% and 12%, respectively. The rate cut has made financing more accessible, encouraging first-time buyers and boosting fleet sales for commercial vehicles.
Government policies supporting rural economies and infrastructure development have further fueled demand. However, FADA cautioned that supply chain disruptions, particularly for EVs, could temper growth if rare earth shortages persist. Automakers are responding by strengthening domestic supplier networks and investing in alternative materials.
For consumers, the increased demand may lead to longer wait times for popular models, but the sector’s optimism signals a strong recovery from post-pandemic challenges. India’s auto industry is poised for continued growth, provided supply constraints are addressed.
