The Federation of Automobile Dealers Associations (FADA) has released vehicle retail data for February 2025. FADA President, Mr. C. S. Vigneshwar, shared his insights on the auto retail performance for the month: “February witnessed a broad-based downturn across all categories, aligning with our earlier survey projections, which anticipated a ‘Flat to De-growth’ sentiment. The market closed with a -7% year-on-year (YoY) decline, with segment-specific drops of 6% in two-wheelers (2W), 2% in three-wheelers (3W), 10% in passenger vehicles (PV), 14.5% in tractors (Trac), and 8.6% in commercial vehicles (CV). During the month, dealers expressed concerns about inventory being pushed onto them without consent. While such measures may serve broader business objectives, aligning wholesale allocations with actual demand is crucial to maintaining dealer viability and ensuring healthy inventory levels.”
Segment-Wise Breakdown
- Two-Wheeler (2W) Segment: Despite an 8.57% fiscal year-to-date (FY YTD) growth, retail sales dipped by 6.33% YoY. Urban areas saw a sharper decline of 7.38% compared to 5.5% in rural markets. Better agricultural sentiment and seasonal marriage demand contributed to the relatively better rural performance. Dealers cited inventory imbalances, aggressive pricing adjustments (post-OBD-2B norms), weak consumer sentiment, lower enquiry volumes, and restricted financing availability as key challenges. Concerns over slow-moving models and broader economic pressures, including liquidity constraints and inflation, further compounded the situation.
- Passenger Vehicle (PV) Segment: Despite a modest 4% YTD growth, retail sales fell sharply by 10.34% YoY. Weak market sentiment continued, particularly in the entry-level category, with delayed conversions and challenging sales targets. Dealers stressed the need for OEMs to avoid overburdening them with excessive inventory, which risks unmanageable stock levels given the industry’s cyclical nature. Inventory levels remained in the range of 50-52 days.
- Commercial Vehicle (CV) Segment: Retail sales dropped by 8.6% YoY despite a marginal YTD decline of 0.5%. Dealers highlighted a challenging commercial environment marked by weak transportation sector demand, tightening finance norms, and pricing pressures delaying customer decisions—especially for bulk orders and institutional contracts. However, the segment saw some relief from robust order bookings, particularly in the tipper category, driven by increased government spending and steady supplies. Despite these pressures, cautious optimism prevails, with expectations of market improvement in March as dealers recalibrate targets to align with current demand trends.
Near-Term Outlook
The outlook for auto retail in March 2025 remains cautiously optimistic. Dealer expectations indicate that nearly 45% foresee growth, 40% anticipate flat performance, and only 14% expect further de-growth. However, persistent challenges include five consecutive months of declining stock markets, dampened consumer confidence, increased closure of Systematic Investment Plans (SIPs), and reduced discretionary spending due to lower profitability.
Despite these hurdles, multiple upcoming festivals—including Holi, Gudi Padwa, and the onset of Navratri—along with year-end depreciation benefits, are expected to drive vehicle purchases.
- Two-Wheeler (2W) Outlook: Positive agricultural output and a favorable festive calendar are expected to support demand, even though the booking pipeline slowed toward the end of February.
- Commercial Vehicle (CV) Outlook: Increased government spending and a rise in institutional buying may provide a boost, despite ongoing liquidity challenges.
- Passenger Vehicle (PV) Outlook: Attractive financing schemes, preponed festival sales, and fiscal year-end advantages are likely to fuel growth.
Overall, while mixed sentiments persist, an adaptive market strategy leveraging festive demand and financial incentives is expected to aid recovery in March.
