Vehicle registrations in India saw a 5% rise in May, reaching 2.21 million units. Two-wheeler, three-wheeler, and tractor sales drove this growth. However, passenger and commercial vehicle registrations experienced a decline. The increase is attributed to auspicious events and a strong harvest. Financing availability and geopolitical tensions remain concerns. Future monsoon and potential rate cuts may further boost demand.
As per data collated by industry body Federation of Automobile Dealers Associations (FADA) from the VAHAN portal of the Ministry of Road Transport & Highways (MoRTH) sales of two-wheelers, three-wheelers and tractors went up by 7.3% (to 1,652,637 units), 6.3% (to 104,448 units) and 2.75% (to 71,992 units), respectively. Registrations of passenger vehicles and commercial vehicles declined by 3.1% to 302,214 units and by 3.7% to 75,615 units, FADA data shows.
In the two-wheeler category, retail volumes fell 2.02% MoM but still posted a robust 7.31% YoY increase. FADA President C S Vigneshwar said, “Dealers attribute this resilience to a higher number of auspicious marriage days, a strong Rabi harvest, and pre-monsoon demand—especially in semi-urban and rural markets.” However, availability of financing in the economy segment is limiting upside potential, stakeholders said, adding it is important to continue to monitor liquidity access and model availability to preserve momentum.
Passenger-vehicle retails contracted by 13.6% MoM and 3.1% YoY, while inventory days—which had hovered around 50—have edged up to approximately 52–53 days.
FADA said entry-level models were hardest hit as constrained financing and subdued consumer sentiment compounded the slowdown. Heightened war related tensions in border states like Jammu & Kashmir, Punjab, Rajasthan, and Gujarat further prompted buyers to delay purchases.
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“Although bookings remained fairly healthy, retail conversions lagged on margin-money challenges and deferred decisions. OEMs must adopt a cautious, ground-reality-aligned approach to production planning and channel incentives so that dealers are not burdened by rising carrying costs or forced into excessive discounting”, Vigneshwar informed.
Commercial-vehicle retails declined by 11.25% MoM and 3.71% YoY amid muted freight cycles, tight liquidity, and adverse geopolitical sentiment. While bus sales offered some relief, passenger carriers and commodity-linked segments (cement, coal) saw sharp dip due to delayed financing and softening industry growth. Wholesales, however, accelerated as OEMs and Dealers built inventory ahead of the June 2025 mandatory A/C driver-cabin regulation.
Vigneshwar said India’s economic foundations remain robust as Q4 FY25 GDP sustains near 6.5% growth and consumer-price inflation trends toward the RBI’s 4%target. “The India Meteorological Department’s revised forecast—monsoon rains at 106% of the long-period average—signals renewed rural liquidity and stronger farm incomes, which should bolster semi-urban and hinterland demand for two-wheelers and tractors. Concurrently, a widely anticipated repo-rate reduction in early June will continue to ease borrowing costs for both dealerships and end customers”, he said.
Recent fiscal measures—such as the 3% MSP hike on kharif crops—are also poised to boost agricultural cash flows. However, global supply-chain headwinds—from rare-earth constraints in EV components to ongoing geopolitical tensions—may keep urban consumer sentiment in check.
Agencies
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