Automobile retail sales increased by 6.5 percent in fiscal year 2024-25 (FY25), driven primarily by a 5% increase in passenger vehicle (PV) sales, an 8% increase in two-wheeler sales, and a 5% increase in commercial vehicle (CV) sales. This compares to the industry's 10% growth in the previous fiscal year (FY24). However, concerns arose in March, when retail sales fell for the second consecutive month, by 0.7% compared to March 2024.
According to data from the Federation of Automobile Dealers Associations (Fada), the drop was caused by a 2% decrease in two-wheeler sales, a 6% decrease in three-wheeler sales, and a 6% decline in tractor sales.
The only bright spot in March's performance, which otherwise slowed the fiscal year's momentum, was a 6% year-on-year (Y-o-Y) increase over March of the previous year. This is primarily due to incentives, festival-related gains, and new launches.
In February, industry sales fell by 7%, with all categories in the red. In absolute numbers, the country sold 26 million vehicles in FY25, compared to 24.5 million in FY24.
"The first three weeks of March were noticeably weak, owing largely to the Kharmas period, but sales increased significantly last week, fueled by positive triggers such as Navratri, Gudi Padwa, Eid, and year-end purchasing influenced by depreciation benefits," said C. S. Vigneshwar, president of Fada.
Though passenger vehicles performed well in March, the dealers' body warned original equipment manufacturers (OEMs) of a higher inventory level of 50-55 days.
"Unrealistic targets, liquidity challenges, and low demand in specific regions have caused PV inventories to rise to 50-55 days. Overall results improved due to incentives and festival-driven gains, but dealers are still concerned about high stock levels and target pressures as the new fiscal year begins," Vigneshwar added.
Dealers across India are cautiously optimistic about FY26, with Fada forecasting mid-to-high single-digit growth in the two-wheeler segment and low single-digit growth in PVs and CVs. Another source of concern for the government and industry is the slow growth in the penetration of electric vehicles (EVs).
While EV penetration increased marginally from 7.1% in FY24 to 7.8% in 2025, it fell to 9.9% in March 2025 from 10.3% the previous March. In PVs, market leader Maruti Suzuki reported a 3% increase in sales in March to 132,423 units. However, there is a healthy competition for second place between three majors: Tata Motors, Mahindra and Mahindra (M&M), and Hyundai Motor.
In February, M&M surpassed Hyundai Motor to become the market's second-largest player, while Tata Motors sold 48,462 units in March, a 4% increase over the same period last year. M&M increased sales by 17% to 46,297 units in March compared to the previous year, while Hyundai Motor fell to second place with 42,511 units, a 5% decrease.
CV dealerships reported a moderate 2.68 percent year-on-year growth, owing to Gudi Padwa deliveries, supportive financing, and infrastructure activity that increased customer footfall. However, aggressive targets and uneven product availability posed significant challenges to the segment, according to Fada.
