India’s Auto Retail Sector Registers 5.11% Growth In May 2025: FADA

The Federation of Automobile Dealers Association (FADA) revealed that the Indian auto retail sector registered a 5.11 per cent year-on-year growth in May 2025. This modest spike in sales was primarily spearheaded by the two-wheeler sector which cumulatively saw sales of 16,52,637 bikes and scooters. This represents a 7.31 per cent year-on-year (YoY) growth in two-wheeler sales, however, on a month-on-month (MoM) basis it was 2.02 per cent less than the 16,86,774 unit sales it registered in April 2025. 

On the other hand, passenger vehicle sales plummeted by a whopping 13.64 per cent (MoM) basis last month, 3,02,214 units sold as against the 3,49,939 units sales this sector registered in April. Even on YoY basis the PV sector registered a drop in sales by 3.11 per cent as against the 3,11,908 units it registered last year in the same month. The situation has not improved at the inventory level too which has now further increased to 52-53 days from 50 days before. Entry-level cars have been hit the hardest in particular, coupled with war related tensions in states like Jammu & Kashmir, Rajasthan, Punjab and Gujarat – it has further prompted buyers to delay purchases. 

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However, for the two-wheeler category, dealers attributed this rise in sales primarily to pre-monsoon demand. Coupled with factors like the higher number of marriages, and a strong Rabi harvest season — demand for two-wheelers in semi-urban and rural markets have been particularly encouraging. However, FADA noted that financing constraints in the economy segment have capped full upside potential, and in the future stakeholders should continue to monitor liquidity access and model availability to preserve momentum. 

India’s economic foundations have so far remained robust in the fourth quarter of 2025 wherein it has sustained near 6.5 per cent growth. The Indian Meteorological Department has also predicted that monsoon rains this year will be longer than average by 106 per cent and that should further renew rural liquidity and stronger farm incomes. Which in turn should further bolster semi-urban and hinterland demand for two-wheelers and tractors.

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But disruptions in the global supply chain due to restrictions on rare earth magnet imposed by China will affect EV sales. Coupled with the ongoing geopolitical tensions, urban consumers sentiment will continue to be under check.