Auto retail slumps 7% in february: Pvs hit hardest (-10.3%), tractors down 14.5%, cvs fall 8.6%, two-wheelers decline 6.3%, three-wheelers show smallest drop at 1.9%.
06 Mar 2025 | 1521 Views | By Angitha Suresh
The Federation of Automobile Dealers Associations (FADA) has revealed a disappointing trend across India's automotive sector for February 2025. The month closed with a 7.19% year-on-year decline, confirming the "Flat to De-growth" sentiment previously indicated by FADA's dealer survey.
The report paints a sobering picture of the Indian auto ...
This is an Autocar Pro Plus article. Subscribe to continue reading.
The Federation of Automobile Dealers Associations (FADA) has revealed a disappointing trend across India's automotive sector for February 2025. The month closed with a 7.19% year-on-year decline, confirming the "Flat to De-growth" sentiment previously indicated by FADA's dealer survey.
The report paints a sobering picture of the Indian auto retail landscape, with all segments registering negative growth on a year-on-year basis.
Two-wheelers declined by 6.33%, three-wheelers by 1.92%, passenger vehicles by 10.34%, tractors by 14.50%, and commercial vehicles by 8.60%.
This across-the-board contraction signals broader economic challenges affecting consumer spending power and confidence.
FADA President, Mr. C S Vigneshwar, highlighted key concerns that emerged during the month. "Dealers began expressing concerns about inventory being pushed to them without their consent," he noted.
"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."
In the two-wheeler segment, despite an encouraging 8.57% fiscal year-to-date growth, February's retail sales dropped significantly. Urban areas experienced a sharper decline of 7.38% compared to a milder 5.5% drop in rural markets.
The relative resilience in rural areas was attributed to improved agricultural sentiments and seasonal marriage demand. However, dealers pointed to persistent challenges including inventory imbalances, aggressive pricing adjustments following OBD-2B implementation, weak consumer sentiment, lower enquiry volumes, and limited finance availability.
The passenger vehicle segment faced even steeper challenges, with retail sales falling by 10.34% year-on-year despite a modest 4% year-to-date growth. Dealers reported particularly weak market sentiment in the entry-level category, with delayed conversions and challenging sales targets. Inventory levels remained elevated at 50-52 days, underscoring the need for better alignment between OEM distribution strategies and actual retail potential.
Dealers urged manufacturers to avoid overburdening them with excessive inventory—a practice that risks creating unmanageable stock levels given the cyclical nature of the industry.
Commercial vehicles, which have seen a modest year-to-date decline of 0.5%, experienced an 8.6% year-on-year drop in February.
Dealers attributed this to a challenging commercial environment, with weak sales in the transportation sector, tightening finance norms, and pricing pressures delaying customer decisions, particularly for bulk orders and institutional contracts.
Some relief came from robust order bookings in the tipper segment, driven by increased government spending and steady supplies.
Beyond the segment-specific concerns, broader economic factors appear to be dampening consumer enthusiasm. FADA reported that five consecutive months of declining stock markets have eroded consumer confidence, with investors closing more SIPs rather than opening new ones, and reduced discretionary spending driven by dented profitability.
Looking ahead to March, dealer expectations remain cautiously optimistic, with survey data indicating nearly 45% predict growth, 40% expect flat performance, and only 14% anticipate further decline.
The convergence of multiple festivals—ranging from Holi and Gudi Padwa to the onset of Navratri—combined with year-end depreciation benefits could potentially boost vehicle purchases across segments.
In the two-wheeler segment, positive agricultural output and the festive calendar are viewed as potential catalysts, even though the booking pipeline slowed toward the end of February. For commercial vehicles, increased government spending and institutional buying might offset ongoing liquidity challenges. Meanwhile, passenger vehicle sales could gain traction through attractive schemes, preponed festival sales, and fiscal year-end advantages.
The sales performance has created varied impact across urban and rural markets. According to FADA's Vehicle Retail Strength Index, urban areas generally experienced steeper declines than their rural counterparts. This geographic divergence was particularly pronounced in the two-wheeler segment, where urban sales fell by 7.38% compared to 5.54% in rural areas.
Market share analysis revealed relative stability among segment leaders. In two-wheelers, Hero MotoCorp maintained its dominant position with 28.52% market share, followed by Honda Motorcycle at 24.27% and TVS at 18.73%. The passenger vehicle segment continued to be led by Maruti Suzuki with 38.94% market share, followed by Mahindra at 13.15% and Tata Motors at 12.75%. Commercial vehicles saw Tata Motors retain leadership with 32.53% market share, while Mahindra held 25.55% and Ashok Leyland 17.39%.
Motor vehicle road tax collection also reflected the sales slowdown, with February 2025 collection at ₹6,340 crore, down 7.4% from ₹6,843 crore in February 2024, and significantly below January 2025's ₹8,603 crore.
Industry watchers note that while February's performance raises concerns, the upcoming festive season combined with year-end benefits could potentially trigger a recovery in March. However, the persistent challenges of inventory management, financing constraints, and consumer sentiment will require coordinated efforts from manufacturers, dealers, and financial institutions to restore growth momentum in India's automotive retail sector.