Retail automobile sales in India rose by 9.1% in 2024, reaching 2.61 crore units, despite challenges such as extreme weather, elections, and uneven monsoons. Segment-wise, two-wheeler sales saw a 10.7% increase, three-wheelers grew by 10.4%, passenger vehicles by 5.1%, and tractors posted a 2.5% rise. Commercial vehicles, however, remained nearly flat with a marginal growth of 0.07%, according to data from the Federation of Automobile Dealers Association (FADA).
Three-wheelers, passenger vehicles and tractor segments reached new all-time highs; two-wheelers almost breached its 2018 peak and commercial vehicles have yet to surpass its 2018 level.
Challenges for Internal Combustion Engine two-wheelers included finance constraints and rising Electric Vehicle competition; Commercial Vehicles struggled with election-driven uncertainty and low infra spend; Passenger Vehicle growth led to margin pressures from higher inventory and discounts.
In December 2024, overall retail sales saw a year-on-year decline of 12.4%, with two-wheelers dropping by 17.6%, three-wheelers by 4.5%, passenger vehicles by 1.9%, and commercial vehicles by 5.2%. Tractors, however, experienced a 25.7% YoY increase.
Two-wheeler sales were impacted by low cash flow, weak consumer sentiment, delayed harvest payments, and increased competition from electric vehicles. Passenger vehicle sales declined due to high post-festive inventory levels, aggressive discounting, and limited new launches, prompting many buyers to postpone their purchases to January. The commercial vehicle segment struggled with weak market sentiment, delayed government funding, and financing challenges, though tippers showed some resilience despite the overall decline in light commercial vehicles (LCVs).
In the near term, FADA reports that approximately 48% of automobile dealers anticipate growth in January, while 41.22% expect sales to remain flat, and 10.69% foresee a slowdown.
Two-wheeler demand may be bolstered by improved Minimum Support Prices (MSP) and better rural liquidity, though challenges related to financing and the transition to electric vehicles persist. The commercial vehicle segment might experience a modest recovery, depending on the progress of infrastructure projects and the approval of credit.
Passenger vehicle should get a boost from new launches, marriage-season demand and promotions– but possible price hikes could temper gains, FADA noted.
In the Long-Term, for CY’25, 66.41% of dealers anticipate growth, 26.72% expect stability, and 6.87% predict a downturn. Two-wheeler sales may recover with rising rural incomes and new models, while commercial vehicles could benefit from infrastructure investments and stable credit. Passenger vehicles are expected to gain momentum from new SUVs, EVs, and feature-rich models, though price sensitivity and interest rates remain key concerns.
“Overall, FADA remains optimistic that market recovery, coupled with strategic OEM support and policy-level clarity, will enable the automotive retail industry to end 2025 on a robust note,” the statement added.
