Crime Today News
India’s automobile retail sector posted a modest 5% year-on-year growth in May 2025, with two-wheelers leading the charge while passenger vehicles faced headwinds, according to the latest data released by the Federation of Automobile Dealers Associations (FADA).
The two-wheeler category emerged as the star performer, registering a robust 7.31% year-on-year increase despite a 2.02% month-on-month decline. With retail volumes of 16.52 lakh units, the segment benefited from favorable rural conditions including auspicious marriage dates, strong Rabi harvest, and pre-monsoon demand in semi-urban and rural markets.
Hero MotoCorp maintained its leadership position with a 30.20% market share, followed by Honda Motorcycle and Scooter India at 23.80% and TVS Motor Company at 18.71%. However, financing constraints in the economy segment prevented the sector from realizing its full potential.
Passenger vehicle retails witnessed a concerning decline of 3.1% year-on-year and 13.6% month-on-month, with inventory levels climbing to 52-53 days—significantly above FADA’s recommended 21-day norm. The segment moved 3.02 lakh units in May, down from 3.11 lakh units in the same period last year.
Entry-level models bore the brunt of the slowdown, with constrained financing and subdued consumer sentiment compounding the challenges. Border states including Jammu & Kashmir, Punjab, Rajasthan, and Gujarat saw buyers delaying purchases due to heightened war-related tensions.
Maruti Suzuki continued to dominate the passenger vehicle space with a 38.68% market share, though this represented a slight decline from 39.53% in May 2024. Mahindra & Mahindra strengthened its position with a 14.41% share, up from 11.07% the previous year.
The commercial vehicle segment faced significant headwinds, with retails declining 3.71% year-on-year and 11.25% month-on-month. Muted freight cycles, tight liquidity, and adverse geopolitical sentiment weighed heavily on the sector, which recorded sales of 75,615 units.
Interestingly, while retail sales declined, wholesales accelerated as manufacturers and dealers built inventory ahead of the mandatory air-conditioned driver cabin regulation coming into effect in June 2025.
The data revealed a clear rural-urban divide, with rural markets demonstrating greater resilience across most categories. Rural two-wheeler sales grew 9.85% year-on-year compared to 3.60% in urban areas, while rural three-wheeler sales surged 11.05% against just 1.10% in urban markets.
This trend reflects the impact of strong agricultural performance and improving rural liquidity conditions.
Electric vehicle penetration varied significantly across categories. In the three-wheeler segment, EVs commanded a substantial 63.21% market share, up from 55.72% in May 2024. However, EV adoption in two-wheelers remained modest at 6.07%, while passenger vehicles saw 4.07% EV share.
FADA’s member survey revealed mixed sentiment, with 55.46% expecting flat volumes in June 2025, while 31% anticipated growth and 13.54% foresaw further decline. Market liquidity conditions remained a concern, with 31% of dealers reporting poor liquidity conditions.
The organization expressed cautious optimism for the near term, citing favorable monsoon forecasts at 106% of long-period average and an expected 25 basis point repo rate cut by the RBI in early June. These factors are expected to support rural demand and ease financing conditions.
The retail strength index showed rural markets accounting for 60.8% of two-wheeler sales, 54.4% of three-wheeler sales, and 82.4% of tractor sales, underlining the continued importance of rural India in driving automotive demand.
Construction equipment, now reported as a separate category, declined 6.3% year-on-year, reflecting the broader infrastructure sector’s challenges.
FADA President C.S. Vigneshwar emphasized the need for calibrated production planning and channel incentives to navigate the current challenges. “OEMs must adopt a cautious, ground-reality-aligned approach to production planning and channel incentives so that dealers are not burdened by rising carrying costs,” he stated.
The industry body expects the upcoming monsoon season and potential monetary policy easing to provide much-needed support to rural demand, particularly for two-wheelers and tractors, while passenger vehicle dealers will need to manage elevated inventory levels and focus on improving retail conversions.
With India’s economic fundamentals remaining robust and GDP growth sustaining near 6.5%, the automotive retail sector appears positioned for a gradual recovery, though challenges around financing availability and consumer sentiment persist.
This article first appeared on Autocar
📰 Crime Today News is proudly sponsored by DRYFRUIT & CO – A Brand by eFabby Global LLC
Design & Developed by Yes Mom Hosting
