Federation of Automobile Dealers Associations (FADA) vehicle retail performance for May 2025 shows a modest 5.11% year-on-year (YoY) growth in total volumes. While two-wheelers (2Ws), three-wheelers (3Ws), and tractors posted positive gains, passenger vehicles (PVs), commercial vehicles (CVs), and construction equipment (CE) segments faced YoY contractions, reflecting ongoing challenges in inventory, liquidity, and rural-urban demand divergence.
Two-Wheelers Backed By Rural Momentum
The 2W segment continued to benefit from rural and semi-urban tailwinds, growing 7.31% YoY to 16,52,637 units. Although there was a month-on-month (MoM) dip of 2.02%, volumes were supported by auspicious wedding dates, a healthy Rabi crop season, and pre-monsoon demand in hinterland markets. Retail strength in rural India, where YoY growth stood at 9.85%, contrasted urban markets, which managed only 3.6% growth.
Hero MotoCorp retained its leadership with a 30.2% market share, followed by Honda (23.8%) and TVS Motor (18.7%). Notably, electric two-wheeler registrations by Ola and Ather saw a sharp contraction YoY, highlighting price sensitivity and evolving consumer attitudes towards EVs.
Inventory Overload & Weak Entry Segment Drag Overall Retail In PVs
The PV segment fell 3.11% YoY to 3,02,214 units, with a sharper MoM decline of 13.64%. Inventory levels rose to an alarming 52–53 days, well above FADA’s recommended 21-day norm. Entry-level PVs bore the brunt of this downturn as constrained financing, conflict-induced sentiment dip in border states, and hesitancy among first-time buyers resulted in weak retail conversions.
Urban markets showed a YoY drop of 5.32%, while rural areas barely managed a 0.53% gain. OEMs with robust mid-size SUV portfolios such as Mahindra (14.4% share) saw growth, while legacy players like Maruti Suzuki (38.7%) and Hyundai (12.6%) posted YoY declines. The broader concern lies in stagnant conversion despite decent bookings, indicating a growing disconnect between showroom footfalls and final purchase decisions.
Regulatory Stocking Ahead Of A/C Norms Masks Demand Softness In CVs
CV retail saw a 3.71% YoY decline to 75,615 units, also dropping 11.25% MoM. While there was some uptick in bus sales, driven by state fleet orders and seasonal demand, truck and passenger-carrier demand remained weak due to muted freight cycles and tight financing access.
Pre-emptive wholesaling ahead of the June 2025 deadline for mandatory air-conditioned cabins in trucks temporarily inflated inventory levels but did little to improve actual demand. Tata Motors led with a 34.5% share, followed by Mahindra (26.2%) and Ashok Leyland (18.2%). Rural CV retails shrank 6.25% YoY, indicating deeper issues in goods movement and regional trade sentiment.
Construction Equipment In Decline
May 2025 marked the first month where CE was reported as a standalone category, separated from CVs. The segment saw a 6.32% YoY fall to 5,903 units. JCB retained leadership with 40.6% share, though it too posted a YoY drop. The decline points to cautious infrastructure activity and financing hurdles, as government and private sector project cycles remain under stress.
Rural Demand & Passenger Subsegment Lift Segment For 3Ws
The 3W category rose by 6.28% YoY to 1,04,448 units. MoM growth stood at 4.69%, led by increased passenger movement and e-rickshaw adoption. Rural registrations climbed 11.05% YoY, significantly outpacing urban growth of 1.1%, pointing to strong uptake of shared mobility in non-metro regions.
Electric variants now command over 63% of the three-wheeler segment, with OEMs like YC Electric, Saera, and Mahindra Last Mile Mobility showing strong year-on-year traction. The rising dominance of EVs in this category remains a standout indicator of transition readiness at the last-mile mobility level.
Pre-Monsoon Optimism Returns For Tractors
Tractor retails rose 2.75% YoY and posted a strong 18.18% MoM growth, reaching 71,992 units. Rural growth of 3.58% YoY was supported by robust farm incomes and kharif cropping optimism following the Indian Meteorological Department’s revised monsoon forecast (106% of LPA). Mahindra & Mahindra led with a 22.9% share, followed by Swaraj and International Tractors.
Fuel Trends
Fuel-wise data highlighted a slow but steady rise in electric vehicle adoption across segments. In PVs, EV share rose to 4.07% from 2.57% YoY. In the 2W segment, EV penetration reached 6.07%, slightly up from 5.02% last year. Diesel continued to decline in PVs, now at 19.1%, while hybrids gained marginally to 8.29%.
CE and CV remained diesel-heavy, with over 83% and 99% market share respectively, showing little immediate shift towards electrification due to infrastructure and range limitations.
FADA’s internal dealer sentiment survey showed 55.5% of respondents expect flat volumes in June, while 31% foresee growth. Liquidity was rated ‘neutral’ by nearly half the network, while 31% flagged it as ‘bad’, highlighting field-level credit stress.
Key near-term triggers include a potential 25 basis point repo rate cut by the RBI, MSP hikes in kharif crops, and regional festivals like Rath Yatra. However, challenges like elevated inventory, subdued urban demand, and geopolitical tensions remain risks to sustained recovery.
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