Passenger Vehicle Sales Dip In May Amid Conflict & Weak Demand, Says FADA

India’s passenger vehicle (PV) retail sales declined by 3% year-on-year in May 2025, with overall registrations dropping to 3,02,214 units from 3,11,908 in the same month last year, according to data released by the Federation of Automobile Dealers Associations (FADA) on Friday.

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The dealers’ body attributed the slowdown to subdued demand for entry-level models and a delay in customer purchases in key northern states, triggered by heightened India-Pakistan tensions. Regions like Jammu & Kashmir, Punjab, Rajasthan, and Gujarat saw particularly weak consumer sentiment due to border-related anxieties.

“Even though bookings remained relatively healthy, actual retail conversions were hit by financing difficulties and deferred purchasing decisions,” FADA noted in its statement. The impact was most visible in the entry-level segment, which faced a double blow of constrained financing options and waning consumer confidence. FADA urged Original Equipment Manufacturers (OEMs) to realign production strategies with on-ground realities and to avoid overburdening dealerships with unsold inventory and aggressive discounting expectations.

In contrast, two-wheeler sales showed resilience, rising 7% year-on-year to 16,52,637 units in May. Dealers credited the growth to favourable rural conditions, including a strong Rabi crop, seasonal marriage-related demand, and early monsoon buying. However, the budget segment faced its own limitations due to tight financing availability.

The commercial vehicle (CV) segment reported a 4% drop in sales, registering 75,615 units last month. FADA said muted freight activity, geopolitical concerns, and sluggish financing weighed on the segment. While bus sales showed some signs of life, carriers linked to commodity transport, such as coal and cement, continued to underperform. OEMs, however, ramped up wholesales ahead of the June 2025 deadline for mandatory factory-fitted ACs in driver cabins.

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Meanwhile, three-wheeler sales grew 6% year-on-year, reaching 1,04,448 units in May, driven in part by improving urban mobility trends. Looking ahead, FADA offered a cautiously optimistic outlook for June, highlighting ongoing global supply chain pressures, especially around electric vehicle components, and persistent financing challenges. The association called for closer coordination between manufacturers and financiers to align production volumes, ensure liquidity support, and fine-tune dealer-level incentives.

“Synchronising planning with real-time demand signals will be key to navigating what remains a lean but resilient period for India’s auto retail sector,” FADA said.

(With inputs from PTI)