Passenger vehicles sales trend is encouraging for the Economy

 The Federation of Automobile Dealers Associations (FADA) released its vehicle retail data for March 2025 and the full fiscal year 2024-25 (FY 24-25), reflecting the performance of the Indian automobile retail sector. Based on available insights, overall vehicle retail sales in FY 24-25 showed a growth of 6.5% compared to FY 23-24, with total sales reaching 26 million units, up from 24.5 million units the previous year. This growth was driven by a 5% increase in passenger vehicle sales, an 8% rise in two-wheeler sales, and a 5% uptick in commercial vehicle sales, though March 2025 itself saw a slight year-on-year decline of 0.7% due to early-month weakness offset by festive demand later.

10 year Trend showing correlation between India's Steel Production and India's Passenger vehicles sale:

Courtesy: Trading Economics,March 2025

For March 2025 specifically, sales were influenced by a mix of factors. The month started slowly due to the Kharmas period, but a strong recovery occurred in the last week, fueled by festivals like Navratri, Gudi Padwa, and Eid, alongside year-end buying spurred by depreciation benefits. Passenger vehicle sales in March showed resilience despite a high inventory level of 50–55 days, while two-wheeler sales dipped by 2% year-on-year, and commercial vehicles posted a moderate 2.68% growth. The electric vehicle segment also saw activity, with 9,503 electric passenger vehicles sold in March 2025, reflecting a modest 7.5% year-on-year growth.

Overall, FY 24-25 marked a positive year for vehicle sales in India, with rural demand and festive periods playing key roles, though challenges like high inventory and uneven demand pockets tempered the performance in March.

Key Highlights:

• FY25 Overall Growth: The auto retail sector showed adaptability with an overall growth of 6.46%. Passenger Vehicles (PV) grew by 4.87%, closely matching initial forecasts. Two-Wheelers (2W) grew by 7.71%, while Commercial Vehicles (CV) remained nearly flat at -0.17%.
• Rural vs. Urban Performance: Rural markets outperformed urban areas in 2W, 3W, and PV sales, indicating stronger demand in rural regions.
• March 2025 Retail Sales: Overall retail sales declined by -0.7% YoY but improved by +12% MoM, driven by a late-month surge due to festivals and year-end benefits.
• Dealer Concerns: Dealers expressed concerns over high OEM-set targets, rising inventory levels, cautious lending, and upcoming OBD2-related price hikes.
• Near-Term Outlook (April): A cautious optimism prevails, with nearly half of dealers expecting flat sales and a significant percentage reporting weak booking pipelines.
• Long-Term Outlook (FY26): FADA anticipates mid to high single-digit growth in 2W and low single-digit growth in PV and CV, with new model launches and improved rural incomes as key supportive factors.
• EV Market Share: The EV market share is also detailed, showing the percentage of EV sales compared to total sales in each vehicle category.

Additional Points:

• It also highlights the challenges and headwinds faced by the auto retail sector, such as financing constraints, global tariff wars, and consumer sentiment.
• The data is collated in collaboration with the Ministry of Road Transport & Highways, Government of India, gathered from a significant number of RTOs across the country.