FADA: Auto Retail Sales Decline 7% in Feb 2025 – Here’s Why

India’s automobile retail sales declined by 7 percent in February 2024, reflecting a slowdown across all vehicle categories, according to the data shared by the Federation of Automobile Dealers Associations (FADA). Total vehicle retails in the domestic market dropped to 18,99,196 units, down from 20,46,328 units recorded in February 2023. 

According to auto retail body, retail numbers were lower due to lackluster demand in the market.

As FADA President C. S. Vigneshwar puts it, “February witnessed a broad-based downturn across all categories, a trend that was anticipated in our previous survey which projected a ‘Flat to De-growth’ sentiment for the month,”

Dealers Flag Concerns Surging Inventory Levels 

FADA president expressed concerns over rising inventory levels, highlighting that some manufacturers were pushing excess stocks onto dealerships without their consent.

"While such initiatives may serve broader business objectives, it is critical to align wholesale allocations with genuine demand to protect dealer viability and ensure healthy inventory management,” noted Vigneshwar. 

PV Sales Slide 10 percent

The passenger vehicle (PV) segment witnessed a 10 percent Year-On-Year (YOY) decline, with sales falling to 3,03,398 units in February. 

“Dealers noted weak market sentiment which specially continues in the entry level category, delayed conversions, challenging targets and stressed that OEMs should avoid overburdening dealers with excessive inventory—a practice that risks unmanageable stock levels given the cyclical nature of the industry. This feedback underscores the need for greater alignment between national strategies and local dealer insights,” added Vigneshwar.

He stated that inventory levels in this segment remained in the range of 50-52 days. 

Two-Wheeler Market Sees 6% Drop

The two-wheeler segment declined by 6 percent YoY, with sales slipping to 13,53,280 units from 14,44,674 units in February 2023. 

“Dealers cited factors such as inventory mismanagement, aggressive pricing strategies, weak consumer sentiment, lower inquiries, and financing challenges as key reasons for the decline. The demand dip was more pronounced in urban areas than in rural regions, “ Vigneshwar further added. 

CVs and tractors also on a downswing 

Commercial vehicle (CV) sales fell by 9 percent YoY to 82,763 units, impacted by muted transport demand, tighter financing norms, and cost pressures. Tractor sales dropped 14.5 percent YoY to 65,574 units, reflecting weak rural demand and broader economic challenges.

Business Outlook 

FADA remains cautiously optimistic about March sales, citing potential demand boosts from festivals like Holi, Gudi Padwa, and Navratri, along with year-end depreciation benefits for buyers. “However, weak stock market trends, lower discretionary spending, and declining investor confidence could continue to weigh on sentiment,: noted Vigneshwar.

Despite the near-term challenges, FADA members are hopeful that seasonal demand and improving consumer confidence will aid in market recovery.