The Federation of Automobile Dealers Associations (FADA) reported a 5.1% year-on-year (YoY) growth in total vehicle retail sales for May 2025, with 22,12,809 units sold compared to 21,05,153 in May 2024.
The two-wheeler segment led the growth with a 7.31% YoY rise, recording 16,52,637 units sold. Three-wheeler sales increased by 6.28% to 1,04,448 units, and tractor sales saw a modest 2.75% rise to 71,992 units. However, key segments witnessed a decline: passenger vehicles (PVs) dropped by 3.11%, construction equipment by 6.32%, and commercial vehicles by 3.71%, reflecting tepid market sentiment.
Passenger Vehicles under pressure:
Passenger vehicle sales stood at 3,02,214 units in May. Dealers attributed the slowdown to weak consumer sentiment, difficulties in vehicle financing—especially for entry-level models—and regional uncertainties impacting buyer decisions. Inventory levels in the PV segment surged to 52–53 days, far exceeding FADA’s recommended 21-day norm.
FADA President C S Vigneshwar stated, “While bookings remained consistent, actual retail conversions were impacted by financing challenges and postponement of purchase decisions.”
Commercial and Construction Equipment see dip; Rural demand boosts two-wheelers
Commercial vehicle (CV) sales fell 11.25% month-on-month and 3.71% year-on-year (YoY) in May, as per FADA. The decline was attributed to weak freight movement, financing challenges, and the impact of early monsoon rains. However, wholesales in the segment rose ahead of new regulations mandating air-conditioned driver cabins from June 2025.
For the first time, construction equipment (CE) was reported as a standalone category, with 5,903 units sold—a 6.32% YoY drop. JCB India led the segment with a dominant 40.57% market share.
Rural sentiment drives two-wheeler sales
The two-wheeler segment continued to perform well, fuelled by strong rural and semi-urban demand supported by agricultural earnings and seasonal wedding purchases. Rural regions contributed 54.4% of overall two-wheeler sales. However, financing remained a hurdle, particularly in the entry-level economy segment.
Cautious optimism ahead: FADA outlook for June 2025
FADA remains cautiously optimistic about the near-term outlook, citing strong rural demand supported by a favourable monsoon forecast and a potential 25-basis-point repo rate cut, which could positively influence the auto sector. However, ongoing global supply chain disruptions and geopolitical tensions may dampen urban sentiment and increase input costs.
In a recent dealer survey, 55.46% of FADA members projected flat demand for June 2025, while 31% expected growth and 13.54% anticipated a decline. FADA emphasized the need for a coordinated strategy involving calibrated production, tighter inventory management, and targeted incentives to maintain dealer liquidity and effectively navigate the upcoming lean season.
