New Delhi, June 7: Retail sales of passenger vehicles in May declined 3 percent compared to a year ago due to delays in purchases by customers in several states due to the India-Pakistan conflict and further subdued demand for entry-level models, dealers’ body FADA said on Friday.
Passenger vehicle registrations stood at 3,02,214 units last month as against 3,11,908 units in May 2024.
Entry-level models were the worst hit, as limited financing and weak consumer sentiment further aggravated the slowdown, the Federation of Automobile Dealers Associations (FADA) said in a statement.
Buyers further delayed purchases due to war-related concerns and border tensions in Jammu and Kashmir, Punjab, Rajasthan and Gujarat, it said.
The dealers’ body said though bookings remained fairly good, retail conversion was subdued due to margin-money challenges and deferred decisions.
It said passenger vehicle original equipment manufacturers (OEMs) should adopt a cautious, ground reality-linked approach to production planning and channel incentives so that dealers are not burdened with rising carrying costs or forced to offer excessive discounts.
Two-wheeler retail sales in May grew 7 percent year-on-year to 16,52,637 units as against 15,40,077 units in the same period a year ago. Dealers attributed this resilience to a higher number of auspicious marriage days, strong Rabi harvest and pre-monsoon demand – especially in semi-urban and rural markets, FADA said.
“Despite this, financing constraints in the economy segment limited the full potential. Looking ahead, stakeholders should continue to monitor liquidity access and model availability to maintain momentum,” it said.
FADA said retail sales of commercial vehicles declined 4 percent year-on-year to 75,615 units in May due to a reduced freight cycle, liquidity crunch and unfavourable geopolitical sentiment.
Bus sales offered a slight respite, but passenger carriers and commodity-linked sectors (cement, coal) witnessed a sharp decline due to delayed financing and softness in TIV (total industry volume).
However, wholesales rebounded as OEMs and dealers built up inventory ahead of the mandatory AC driver-cabin regulation of June 2025.
Three-wheeler registrations grew 6 percent year-on-year to 1,04,448 units in May.
On the business outlook, FADA said global supply-chain constraints – from rare-earth constraints in EV components to ongoing geopolitical tensions – could keep urban consumer sentiment subdued.
To navigate this lean but resilient month, OEMs and financiers must coordinate production planning with demand signals on the ground, implement calibrated channel incentives and secure adequate working capital support. Collectively, these factors point to an optimistic near-term outlook for auto retail in June, the dealers’ body said.
