Automobile retail sales in India increased by 7 percent year-on-year in January, reaching 22,91,621 units, fueled by strong demand across various segments, according to the dealer body Fada on Thursday.
"Our observations indicate that each vehicle category --2W, 3W, PV, tractor and CV-- witnessed positive momentum, pointing toward sustained consumer confidence and steady market recovery," the Federation of Automobile Dealers Associations (Fada) President C S Vigneshwar said in a statement.
Passenger vehicle retail sales surged 16 percent year-on-year to 4,65,920 units last month.
While many dealers observed stronger demand, they also highlighted the impact of last year’s substantial discounting, which helped clear older models and boost registrations, according to Vigneshwar.
The supply-demand position was more favourable since the inventory level had improved with a drop of around five days to the region of 50-55 days, as stated by him.
Last month, two-wheeler retail sales reached 15,25,862 units, a 4 percent increase over 14,65,039 units sold the same month last year.
Sales in urban areas were ahead of sales in rural areas with the urban sales recording a growth of 5 percent, while the rural ones increased by 4 percent on a year-on-year basis.
Vigneshwar noted that new product launches, marriage season demand, and better financing options were some of the factors that propelled growth.
On the other hand, he also indicates the continued concern about rising interest rates, rural liquidity issues, and market uncertainty.
Commercial vehicles had an 8 percent increase in sales when compared year-on-year for January, with 99,425 units sold.
Vigneshwar stated that while higher freight rates and strong passenger carrier demand gave a boost, many dealers pointed to challenges such as low cash flow, strict financing policies, and sluggish industries like cement and coal.
Tractor sales increased by 5 percent year-on-year to 93,381 units in January, while three-wheeler retail sales grew 7 percent to 1,07,033 units last month.
Fada highlighted that, following a strong start to 2025, the auto retail sector enters February with cautious optimism.
A recent survey revealed that nearly half of the dealers (46 percent) expect growth this month, while 43 percent anticipate flat sales and 11 percent foresee a decline, according to the industry body.
This mix of sentiments highlights the industry's complex situation, where positive factors are balanced by ongoing challenges, it added.
On a positive note, dealers mentioned that the ongoing marriage season, new product launches, and targeted promotional activities are expected to maintain customer footfall.
Additionally, better inventory management, improved financing options from select lenders, and backlogged orders in certain segments contribute to a sense of cautious optimism, it added.
With supportive policies and a boost in consumer sentiment post-budget, many expect February to see stable or slightly higher sales, Fada stated.
However, shorter working days, areas of weak rural liquidity, and inflationary pressures continue to be concerns, potentially limiting any significant upswing, it noted.
Fada also pointed out that strict lending criteria, higher vehicle costs, and subdued demand in certain industrial sectors could impact overall performance.
