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Informist, Friday, Jun. 6, 2025

 

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--FADA: Supply constraints in rare-earth may limit urban consumer sentiment
--FADA: Supply constraints in rare-earth may lead to cost pressure
--FADA: PV entry model sales hit in May due to subdued consumer sentiment
--FADA: Passenger vehicle inventory rise to 52-53 days from 50 days earlier
--FADA: 2-wheelers saw robust demand in semi-urban, rural areas in May
--FADA: May total vehicle retail sales 2.21 mln units, up 5.1% on year
--FADA: May tractors retail sales 71,992 units, up 2.8% on year
--FADA: May 3-wheeler retail sales 104,448 units, up 6.3% on year
--FADA: May CV retail sales 75,615 units, down 3.7% on year
--FADA: May 2-wheeler retail sales 1.65 mln units, up 7.3% on year
--FADA: May passenger vehicle retail sales 302,214 units, down 3.1% on yr

 

HYDERABAD – Automobile retail sales in the country in May grew 5.11% to 2.21 million units, largely led by two-wheelers and three-wheelers, according to the Federation of Automobile Dealers Associations data released on Friday.

 

In the two-wheeler category, retail volumes posted a robust 7.31% YoY increase to 1.65 million units, aided by a higher number of auspicious marriage days, a strong rabi harvest, and pre-monsoon demand--especially in semi-urban and rural markets, FADA said. However, this segment's sales fell 2.02% month on month.

 

The federation said financing constraints in the economy segment capped the full upside potential of the two-wheeler segment.

 

Passenger vehicle retail sales fell by 3.1% on the year to 302,214 units, while this segment's inventory rose to 52-53 days from 50 days earlier, FADA said in a release. Entry-level passenger vehicle retail sales were hit by subdued consumer demand, impacting the overall segment performance for May, FADA said. 

 

"Entry-level models were hardest hit as constrained financing and subdued consumer sentiment compounded the slowdown. Heightened war-related tensions for border areas like Jammu & Kashmir, Punjab, Rajasthan, and Gujarat further prompted buyers to delay purchases," FADA said.

 

Although passenger vehicle bookings remained fairly healthy, retail conversions lagged on margin-money challenges and deferred decisions, FADA said. FADA said passenger vehicle manufacturers must adopt a cautious, ground reality-aligned approach to production planning and channel incentives so that dealers are not burdened by rising carrying costs or forced into excessive discounting.

 

The retail sales in three-wheeler segment were up by 6.3% on year to 104,448 units. Tractor retail sales for the month under review were up by 2.8% on year to 71,992 units. The commercial-vehicle retail sales for May declined by 3.71% on year and 11.25% month-on-month to 75,615 units due to muted freight cycles, tight liquidity, and adverse geopolitical sentiment.

 

"While bus sales offered some relief, passenger carriers and commodity-linked segments like cement and coal saw sharp degrowth due to delayed financing and softening total industry volume," FADA said. Mandatory air-conditioning cabin norms, which would come into to force in June, are also another reason for lower inventory at the dealers' end.

 

OUTLOOK

The federation said India's near-term outlook for automobile retail sales is cautiously optimistic. Encouraging monsoon forecasts, signalling renewed rural liquidity and stronger farm income, are likely to boost semi-urban and hinterland demand for two-wheelers and tractors, the federation said.

 

"Channel dynamics for June reflect this cautious optimism; monsoon-driven rural traction and festival pull-through should sustain 2-wheeler activity, yet persistent financing constraints and selective OEM (orginal equipment manufacturer) price adjustments may temper incremental gains," FADA said.

 

Global supply constrains in rare-earth minerals shortage may lead to cost pressure and the ongoing geopolitical tensions may keep urban consumer sentiment in check and may increase cost pressure, FADA said.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Narayana Krishna

Edited by Akul Nishant Akhoury

 

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