India’s auto retail sector recorded overall growth of 6.46% in FY25, driven by modest expansion in passenger and two-wheeler segments, while commercial vehicles remained nearly flat. The data released by the Federation of Automobile Dealers Associations (FADA) showed that the passenger vehicle (PV) sales grew by 4.87% in FY25, aligning with FADA’s earlier forecast of low single-digit growth.
However, the two-wheelers (2W) sector posted a 7.71% increase for the year, falling short of the expected double-digit growth. Commercial vehicles (CV) ended FY25 nearly unchanged at -0.17%, reflecting pressure from erratic weather, financing constraints, and varying consumer demand.
“FY25 truly showcased how adaptable and resilient India’s auto retail sector can be,” said FADA President CS Vigneshwar. “Our initial forecast of low single-digit growth—around 5%—for Passenger Vehicles ended up hitting the mark almost perfectly at 4.87%. While we hoped for double digits in Two-Wheelers, we ended up at 7.71%. Commercial Vehicles, on the other hand, came in nearly flat at -0.17%, reminding us just how much factors like unpredictable weather, financing constraints, and shifting consumer sentiment can shape overall demand.”
Rural markets played a key role in supporting growth. Rural two-wheeler sales rose by 8.39%, outperforming urban growth of 6.77%. In the three-wheeler category, rural markets saw an 8.70% increase, significantly higher than the 0.28% recorded in cities. Rural PV sales grew by 7.93% against 3.07% in urban areas.
An outlook for April 2025
FADA expects April to remain uncertain amid rising temperatures and global tariff concerns. The India Meteorological Department’s heatwave forecast and international trade tensions may affect footfalls and buyer confidence. While regional festivals and the marriage season may support short-term demand, nearly 60% of surveyed dealers reported weak booking pipelines.
Segment-wise, two-wheeler dealers are hopeful for a boost from seasonal demand but remain cautious due to rising OBD2B costs and soft rural markets. Passenger vehicle dealers are banking on regional festivals like Akshay Tritiya and Baisakhi to sustain volumes but face overstock and weak sentiment. CV retailers expect some continuity from infrastructure spending and school transportation needs, but remain alert to climate and trade disruptions.
Looking ahead to FY26, FADA projects mid to high single-digit growth in the two-wheeler segment and low single-digit growth for PV and CV. Dealers remain cautiously optimistic, supported by upcoming launches and rising EV interest. However, credit access remains tight, and higher vehicle prices under OBD2B norms may challenge affordability.
“The outlook for FY26 remains cautious. Financing constraints and global tariff uncertainties continue to shape consumer sentiment,” FADA said in its assessment.
Concerns over a global tariff war and potential financial market instability could also impact discretionary spending. PV dealers expect new launches and targeted promotions to drive interest. In the CV segment, demand for buses may grow, but freight activity remains uneven.
FADA emphasised the need for balanced inventory levels, coordinated sales targets, and stronger financial support to navigate a challenging but opportunity-laden year ahead.
March 2025 snapshot
Retail sales in March 2025 declined 0.7% year-on-year (YoY), though month-on-month (MoM) numbers rose 12% across segments. Segment-wise, two-wheelers dropped 1.7% YoY, three-wheelers fell 5.6%, and tractors declined 5.7%. Passenger vehicles grew 6% and commercial vehicles rose 2.6% YoY. All segments reported MoM gains.
“The first three weeks of March were notably weak, largely due to the Kharmas period, but sales accelerated significantly in the last week, driven by positive triggers such as Navratri, Gudi Padwa, Eid, and year-end purchasing influenced by depreciation benefits,” said Vigneshwar.
Despite the recovery in the final week, dealers expressed concerns about high and unilateral sales targets set by manufacturers. FADA noted that such targets, when disconnected from market realities, could affect dealer sustainability.
In the two-wheeler segment, March MoM sales grew by 11% despite a YoY dip. Dealers cited festive demand, discounts, and price hikes from upcoming OBD2-related norms as influencing factors. However, weak rural liquidity, cautious financing, and competition from electric vehicles continued to weigh on performance.
Passenger vehicle sales grew 15.5% MoM and 6% YoY, supported by festive buying, discounts, and new model availability. Inventory levels, however, remained elevated at 50–55 days. Dealers flagged concerns around high stock, liquidity issues, and inconsistent demand.
Commercial vehicle dealers saw a 2.68% YoY rise and a strong 14.5% MoM jump, supported by school bus demand, financing support, and infrastructure activity. Challenges included product availability and target pressures, though festive sales helped close the month positively.
Amid tariffs and global uncertainty, the dealers and industry experts have remained cautious of their next approach.
However, the two-wheelers (2W) sector posted a 7.71% increase for the year, falling short of the expected double-digit growth. Commercial vehicles (CV) ended FY25 nearly unchanged at -0.17%, reflecting pressure from erratic weather, financing constraints, and varying consumer demand.
“FY25 truly showcased how adaptable and resilient India’s auto retail sector can be,” said FADA President CS Vigneshwar. “Our initial forecast of low single-digit growth—around 5%—for Passenger Vehicles ended up hitting the mark almost perfectly at 4.87%. While we hoped for double digits in Two-Wheelers, we ended up at 7.71%. Commercial Vehicles, on the other hand, came in nearly flat at -0.17%, reminding us just how much factors like unpredictable weather, financing constraints, and shifting consumer sentiment can shape overall demand.”
Rural markets played a key role in supporting growth. Rural two-wheeler sales rose by 8.39%, outperforming urban growth of 6.77%. In the three-wheeler category, rural markets saw an 8.70% increase, significantly higher than the 0.28% recorded in cities. Rural PV sales grew by 7.93% against 3.07% in urban areas.
An outlook for April 2025
FADA expects April to remain uncertain amid rising temperatures and global tariff concerns. The India Meteorological Department’s heatwave forecast and international trade tensions may affect footfalls and buyer confidence. While regional festivals and the marriage season may support short-term demand, nearly 60% of surveyed dealers reported weak booking pipelines.
Segment-wise, two-wheeler dealers are hopeful for a boost from seasonal demand but remain cautious due to rising OBD2B costs and soft rural markets. Passenger vehicle dealers are banking on regional festivals like Akshay Tritiya and Baisakhi to sustain volumes but face overstock and weak sentiment. CV retailers expect some continuity from infrastructure spending and school transportation needs, but remain alert to climate and trade disruptions.
Looking ahead to FY26, FADA projects mid to high single-digit growth in the two-wheeler segment and low single-digit growth for PV and CV. Dealers remain cautiously optimistic, supported by upcoming launches and rising EV interest. However, credit access remains tight, and higher vehicle prices under OBD2B norms may challenge affordability.
“The outlook for FY26 remains cautious. Financing constraints and global tariff uncertainties continue to shape consumer sentiment,” FADA said in its assessment.
Concerns over a global tariff war and potential financial market instability could also impact discretionary spending. PV dealers expect new launches and targeted promotions to drive interest. In the CV segment, demand for buses may grow, but freight activity remains uneven.
FADA emphasised the need for balanced inventory levels, coordinated sales targets, and stronger financial support to navigate a challenging but opportunity-laden year ahead.
March 2025 snapshot
Retail sales in March 2025 declined 0.7% year-on-year (YoY), though month-on-month (MoM) numbers rose 12% across segments. Segment-wise, two-wheelers dropped 1.7% YoY, three-wheelers fell 5.6%, and tractors declined 5.7%. Passenger vehicles grew 6% and commercial vehicles rose 2.6% YoY. All segments reported MoM gains.
“The first three weeks of March were notably weak, largely due to the Kharmas period, but sales accelerated significantly in the last week, driven by positive triggers such as Navratri, Gudi Padwa, Eid, and year-end purchasing influenced by depreciation benefits,” said Vigneshwar.
Despite the recovery in the final week, dealers expressed concerns about high and unilateral sales targets set by manufacturers. FADA noted that such targets, when disconnected from market realities, could affect dealer sustainability.
In the two-wheeler segment, March MoM sales grew by 11% despite a YoY dip. Dealers cited festive demand, discounts, and price hikes from upcoming OBD2-related norms as influencing factors. However, weak rural liquidity, cautious financing, and competition from electric vehicles continued to weigh on performance.
Passenger vehicle sales grew 15.5% MoM and 6% YoY, supported by festive buying, discounts, and new model availability. Inventory levels, however, remained elevated at 50–55 days. Dealers flagged concerns around high stock, liquidity issues, and inconsistent demand.
Commercial vehicle dealers saw a 2.68% YoY rise and a strong 14.5% MoM jump, supported by school bus demand, financing support, and infrastructure activity. Challenges included product availability and target pressures, though festive sales helped close the month positively.
Amid tariffs and global uncertainty, the dealers and industry experts have remained cautious of their next approach.
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