Passenger Vehicle Sales Up 1.5% YoY In April; Inventory Levels Remain Elevated

India’s automobile retail sector began the new fiscal year on a modestly positive note, with overall vehicle sales rising 3 per cent year-on-year (YoY) in April 2025, according to the latest data released by the Federation of Automobile Dealers Associations (FADA). While all segments except commercial vehicles (CVs) recorded growth, the real headline is FADA’s debut of fuel-wise market share insights, offering a granular view into India’s evolving vehicle-energy mix.

“As fuel-mix trends become a key barometer for market forecasting and sustainability planning, our new segment-wise data aims to empower OEMs, dealers, policymakers and investors alike,” said FADA President C. S. Vigneshwar.

Modest Gains Amid Festive Tailwinds

April’s performance came against a backdrop of revived consumer sentiment. The recent pause in the global tariff war helped financial markets rebound, easing uncertainty for big-ticket purchases. Meanwhile, seasonal festivities such as Chaitra Navratri, Akshay Tritiya, Baisakhi and Vishu contributed to retail momentum.

Retail growth was led by a 24.5 per cent surge in three-wheelers, while two-wheelers (2W) rose by 2.25 per cent and passenger vehicles (PV) edged up by 1.5 per cent. The tractor segment, buoyed by rural tailwinds, grew 7.5 per cent. However, commercial vehicles (CVs) declined by 1 per cent YoY, as advance purchases in March and price hikes muted fresh demand.

Rural Pulse Strong, But Credit Constraints Loom

A deeper dive into the two-wheeler segment shows that rural India continues to act as a pillar of strength. Dealers reported strong footfall post-Rabi harvest, driven by robust crop yields, good reservoir levels, and a positive monsoon forecast. Wedding season also contributed to rural offtake. In urban markets, new model launches supported sentiment, though elevated interest rates and OBD2B-led price increases posed headwinds.

The PV segment, despite limited new launches, saw a slight increase. Yet, dealer-level inventory remains elevated—at nearly 50 days—leading to discount-led retailing. “SUVs continue to drive volumes, but entry-level demand remains tepid. OEMs must recalibrate production to avoid excessive dealer stock,” Vigneshwar added, reiterating FADA’s push for a 21-day inventory norm.

CVs Hit Pause; EV 3-Wheelers Gain Momentum

The CV segment continued to struggle, hurt by OEM-led price hikes, stagnant freight rates, and excess inventory from March’s pre-buying. Light commercial vehicle (LCV) sales bore the brunt, especially in the cargo subsegment. However, buses showed resilience—fueled by school and staff transport demand.

The electric three-wheeler space remains a bright spot, with growing adoption in urban and peri-urban markets. Yet, intensifying competition and tighter financing norms could temper growth if left unchecked.

May Outlook: Mixed Signals, Cautious Optimism

FADA’s outlook for May suggests a cautiously optimistic stance. On the positive side, the IMD’s above-normal monsoon forecast bodes well for farm income and rural consumption. However, recent data from Kantar and GroupM highlight a growing gap between household income and spending in rural areas—indicating selective consumption and softening discretionary demand.

Additionally, while the RBI’s bond purchases are expected to inject liquidity and potentially lower lending rates, auto loan financiers are reportedly tightening borrower norms. “Higher CIBIL score cutoffs and stricter down payment mandates are slowing conversions despite improving macro liquidity,” a Delhi-based dealer told this publication.

Segment-specific highlights for May include:

2W: Expected to benefit from ongoing wedding-season demand, though extreme heat and school holidays may affect showroom footfalls.

PV: Likely to remain range-bound as buyers await new launches and relief in financing costs.

CV: Outlook remains flat due to a high base, muted e-commerce logistics, and price fatigue, though government infra push may help.

Going forward, FADA urges OEMs and dealers to focus on disciplined inventory management, targeted retail incentives, and improving credit access for entry-level buyers. “Demand in FY26 will be episodic and uneven, so operational agility and customer-centric financing will be key to maintaining growth,” Vigneshwar concluded.

Chart showing Vehicle Retail Data for Apr’25

All India Vehicle Retail Data for Apr’25

Source: FADA Research

Chart showing Fuel Wise Vehicle Retail Market Share for Apr’25