Indian Auto Retail Sector Sees 6.6% Growth In Jan 2025: FADA Report

(MENAFN- KNN India) New Delhi, Feb 6 (KNN) The Indian automobile retail sector demonstrated robust performance in January 2025, recording a 6.6 percent year-on-year growth across all vehicle segments, according to the latest report from the Federation of Automobile Dealers Associations (FADA).

This positive start to the year comes amid varied dealer expectations for future market conditions.

A comprehensive survey of auto dealers revealed a divergent outlook, with 46 percent anticipating continued growth, while 43 percent expect sales to maintain current levels.

The remaining 11 percent project a potential decline, reflecting the complex dynamics within the industry. Dealers express cautious optimism for February sales, supported by recent government policy initiatives and improved consumer sentiment following the Union Budget.

In the segmental analysis, passenger vehicles emerged as the strongest performer with a 15.53 percent year-on-year increase, partially attributed to deferred December purchases as consumers waited for 2025 model year vehicles.

The two-wheeler segment registered a 4.15 percent growth, driven by new product launches, seasonal wedding demand, and enhanced financing options, despite ongoing challenges in rural liquidity and elevated interest rates.

Commercial vehicle sales showed positive momentum with an 8.22 percent year-on-year increase, benefiting from higher freight rates and strong demand in the passenger carrier segment.

However, the sector faces headwinds from reduced activity in cement, coal, and infrastructure sectors, compounded by stringent financing policies. Three-wheeler sales grew by 6.8 percent, while tractor sales increased by 5 percent, indicating stable rural demand.

The report highlighted an improvement in inventory management within the passenger vehicle segment, with stock levels decreasing by approximately five days to reach 50-55 days, suggesting better alignment between supply and demand.

Market distribution data revealed a slight increase in urban passenger vehicle sales share to 61.8 percent, while rural markets demonstrated stronger growth dynamics with an 18.57 percent year-on-year increase compared to urban markets' 13.72 percent.

Looking forward, FADA maintains a balanced outlook for February, anticipating that supportive policies and seasonal demand factors could sustain current growth trajectories.

However, the association acknowledges persistent challenges, particularly in rural financing and sector-specific demand weakness, which could influence the industry's overall growth trajectory in the coming months.

(KNN Bureau)

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