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Informist, Monday, Apr. 7, 2025

 

--FADA: March passenger vehicle retail sales 350,603 units, up 6.3% on year 

--FADA: Mar 2-wheeler retail sales 1.51 mln units, down 1.8% on year 
--FADA: PV dealers point to regional pockets of low demand 
--FADA: PV dealers point to unrealistic targets, liquidity challenges 
--FADA: PV inventories rose to about 50-55 days 
--FADA: FY25 total vehicle retail sales 26.14 mln units, up 6.5% on year 
--FADA: Mar total vehicle retail sales 2.13 mln units, down 0.7% on year 
--FADA: Mar tractors retail sales 74,013 units, down 5.7% on year 
--FADA: Mar 3-wheeler retail sales 99,376 units, down 5.7% on year 
--FADA: Mar CV retail sales 94,764 units, up 2.7% on year 
 

NEW DELHI – Automobile retail sales contracted 1% year-on-year in March, but managed to expand in mid single digits in 2024-25 (Apr-Mar), the Federation of Automobile Dealers Associations said on Monday. Going ahead, the lobby body anticipates modest growth for auto units, but flagged financing constraints, spillovers from the global tariff war, and a cautious consumer sentiment. 

 

Customers held back purchases in the first three weeks of March due to the inauspicious period of Kharmas. However, sales picked up in the final week of the month due to demand related to the festivals of Navratri, Gudi Padwa, and Id.

 

In March, dealers sold 2.13 million units to customers, 0.7% lower than the same month a year ago, but nearly 12% higher than in February. Two-wheeler retail sales, which form over 70% of the overall automobile sales, declined 1.8% on year in March to 1.51 million units. "While festive demand and attractive discounts spurred some MoM momentum, subdued market sentiment persisted, influenced by upcoming OBD2-related price hikes, weak rural liquidity, and cautious financing," FADA said. In addition, stiff targets, heightened competition, and a slower economy contributed to the contraction, it said. In March, three-wheeler retail sales declined 5.7% to 99,376 units, while tractor sales fell by the same quantum on year to 74,013 units.

 

Passenger vehicle sales in March stood at 350,603 units, 6.3% higher on year. FADA attributed this growth to discounting, advancement of purchases given the onset of price hikes, festive buying, new model launches, and better variant availability. Inventory levels at dealerships increased to about 50-55 days due to unrealistic targets set by original equipment manufacturers, liquidity challenges, and regional pockets of low demand. 

 

Sales of commercial vehicles improved to 94,764 units in March, 2.7% higher than a year ago. Sequentially, commercial vehicle sales expanded 14.5%. Apart from heavy commercial vehicles, all the sub-segments in this category registered growth year-on-year. "Gudi Padwa deliveries, supportive financing, and infrastructure activity elevated customer footfall. However, major hurdles included aggressive targets and uneven product availability," FADA said.  

 

FY25 RETAIL SALES

In FY25, dealers sold 26.14 million units to customers, 6.5% higher than in FY24. Barring tractors and commercial vehicles, all segments reported year-on-year growth. Dealers sold 18.88 million two-wheelers in FY25, 7.7% higher year-on-year, short of FADA's "hope" of a double-digit increase. Three-wheeler retail sales in FY25 were at 1.22 million units, 4.5% higher on year. Barring passenger e-rickshaws, all sub-segments of three-wheelers reported growth for the year.

 

Passenger vehicle sales in FY25 were at 4.15 million units, 4.9% higher on year and in line with the lobby body's initial forecast. Dealers sold around a million commercial vehicles in FY25, down 0.2% from the previous year, with sharp weakness seen in heavy variants. "... reminding us just how much factors like unpredictable weather, financing constraints, and shifting consumer sentiment can shape overall demand," FADA said on commercial vehicle sales.

 

Consistent with companies' commentaries across the year, sales of automobile units in rural regions outpaced those in urban areas. Rural sales of two-wheelers grew 8.4%, higher than the 6.8% growth in urban areas. Three-wheeler sales in rural areas rose 8.7%, sharply higher than the 0.3% growth in cities. Similarly, passenger vehicle sales growth for rural areas, at 7.9%, was much better than the 3.1% growth in urban areas.

 

OUTLOOK

Auto dealers are currently grappling with an uncertain month shaped by domestic and global factors alike. Buyer sentiment in the near term will be shaped by the meteorological department's forecast of intense heatwaves and renewed tariff tensions. However, nearly 50% of dealers surveyed by FADA expect sales in April to be flat, while nearly 30% see some growth, thanks to festivals and the marriage season. "Yet, the picture is far from rosy: nearly 60% of dealers across all segments report weak booking pipelines, signalling a fragile foundation on which any optimism must rest," FADA said. 

 

For FY26, dealers are "cautiously optimistic". FADA is projecting mid to high single-digit growth in the two-wheeler segment, and low single-digit growth for passenger vehicles and commercial vehicles. Dealers are banking on upcoming model launches and renewed interest in electric vehicles, even as they remain wary of significant headwinds such as financing, and extended price hikes due to emission norms, which could weigh on consumers' budgets.  

 

The global tariff war and the resultant stock market turbulence could erode returns on customers' mutual fund investments, which adds to uncertainty. "If investors see their disposable incomes shrink in tandem with market volatility, discretionary spending – like auto purchases – may well suffer," FADA said.  End

 

Reported by Anand JC

Edited by Avishek Dutta

 

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