Auto Retail Grows 6.46% in FY’25, Rural Markets Drive Momentum: FADA

New Delhi – The Federation of Automobile Dealers Associations (FADA) has released the vehicle retail data for FY’25 and March 2025, showing a modest yet steady growth of 6.46% for the full financial year, with rural demand emerging as a strong growth engine.

Passenger Vehicles (PV) grew by 4.87%, aligning closely with FADA’s projection of around 5%. Two-Wheelers (2W) recorded a 7.71% annual rise—falling short of the expected double-digit increase—while Commercial Vehicles (CV) remained nearly flat with a slight dip of 0.17%.

Rural areas outpaced urban counterparts across all key segments. Two-Wheeler sales rose by 8.39% in rural markets versus 6.77% in cities. A similar trend was observed in Three-Wheelers (8.70% rural vs. 0.28% urban) and Passenger Vehicles (7.93% rural vs. 3.07% urban), reflecting stronger demand in India’s hinterlands.

For March 2025, overall retail sales dipped slightly by 0.7% year-on-year (YoY), but surged 12% month-on-month (MoM), aided by a festival-heavy final week featuring Navratri, Gudi Padwa, Eid, and financial year-end incentives. Segment-wise, PVs grew 6% YoY and CVs by 2.6%, while 2Ws and 3Ws declined by 1.7% and 5.6% respectively.

FADA President C.S. Vigneshwar acknowledged the sector’s resilience, stating, “Despite macroeconomic pressures and inconsistent weather patterns, auto retail showed admirable adaptability. Rural strength stood out, and festival periods played a key role in lifting March numbers.”

However, dealers flagged serious concerns. Many reported unrealistic sales targets set by manufacturers, rising inventory pressures—especially in the PV segment with stock levels at 50–55 days—and continued financing challenges.

Looking ahead to April 2025, the mood among dealers remains cautiously optimistic. While 38.7% expect growth, 46.23% foresee flat sales, and nearly 60% reported weak booking pipelines. Heatwave warnings and global trade uncertainties may further impact footfalls and consumer sentiment.

For FY’26, FADA projects moderate growth: mid to high single digits in 2Ws, and low single digits in PVs and CVs. Dealers hope new model launches, EV penetration, and rural recovery will offset hurdles such as rising prices due to OBD-2B norms and tight credit conditions.

EV adoption continued its upward trajectory with penetration increasing to 7.8% in FY’25, up from 7.1% the previous year. The strongest gains were seen in 3Ws (57.3%) and 2Ws (6.1%).

Despite the growth, the road ahead remains bumpy, with sustainable recovery hinging on collaborative dealer-OEM strategies, policy support, and improving consumer sentiment.

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