Vehicle retail sales jump 10% in May to 2.53 million units on rural demand

New Delhi: Retail sales of vehicles rose by 10% to 2.53 million units year-on-year in May driven by strong rural demand for cars, trucks, and buses despite industry concerns about the impact of escalating fuel prices.

surged 30% in rural India, ahead of a 19% increase in urban markets. In the commercial vehicle segment, rural sales growth at 8% outpaced urban’s 2.6% rise, showed data collated by Federation of Automobile Dealers Associations () from the government’s Vahan portal.

While total passenger vehicle registrations grew 23% in May, those of two-wheelers, three-wheelers, and commercial vehicles went up by 7.5%, 3.6% and 5.3%, respectively. Tractor sales grew 11%.

FADA President C S Vigneshwar said while above-normal summer temperatures, sharp revision in fuel prices, and the evolving West Asia situation did come into play last month, automobile retails in India continued its growth trajectory, indicating resilient demand.

He highlighted that the industry recorded “the best-ever May across 3W, PV, tractors and overall registrations.”

In the two-wheeler segment, continued affordability after the September 22 cut in goods and services tax (GST) rate, coupled with marriage season buying boosted volumes. In several markets, though, heatwave conditions impacted customer walk-ins at showrooms.

Dealers noted a visible rise in enquiries for fuel-efficient and alternative-powertrain options following the latest series of fuel price hikes. The share of electric in total two-wheeler sales grew to 9.25% from 6.11% a year ago. In the passenger vehicle segment too, the share of electric in total sales went up to 6.6% this May from 4.5% a year earlier, and that of CNG to 23.3% from 19.9%.

Passenger vehicle inventory edged up to 31–33 days at May-end from 28–30 days at the close of April.

Commercial vehicle retails in rural markets outperformed urban centres, reflecting demand for goods movement is broadening well beyond the metros.

Dealers said steady freight activity, e-commerce-linked movement, and replacement demand backed sales, but flagged longer financing turnaround time, higher freight and insurance costs linked to the West Asia crisis, and buyer caution as key monitorables.

Going ahead, FADA is cautiously optimistic of demand sustaining in the coming months. The progress of the monsoon and improved cash flows in rural areas are expected to provide structural support even as near-term cost pressures persist.

In the two-wheeler segment, the shift in enquiries towards fuel-efficient EV options are expected to support demand. Passenger vehicles too are likely to draw on healthy booking pipelines, especially in the EV category. Commercial vehicle retails are also expected to stay steady on goods movement and infrastructure-linked activity.

“Persistent heatwave pockets, the trajectory of fuel prices and the West Asia situation, with its pass-through to freight and input costs, remain the principal factors to watch,” said Vigneshwar.

Domestic sales only

Source: FADA Research