Car Retails Surge 16% in Jan. Due to Spillover Effect

Pune: Passenger vehicle retails in January jumped 16 per cent year-on-year to 4,65,920 units, although some of that spike stems from December purchases registered in January for a “2025 model year” advantage, and easing the inventory levels further, the Federation of Automobile Dealers Associations or FADA said on Thursday.

Sequentially, car sales were also up 58.77 per cent, it said.

“Passenger vehicle sales grew robustly by 15.53 per cent YoY and 58.77 per cent month on month, although some of that spike stems from December purchases registered in January for a 2025 model year advantage,” said CS Vigneshwar, president at FADA in a statement.

He said urban markets inched up from 60.8 per cent to 61.8 per cent share, but rural actually posted a higher YoY growth of 18.57 per cent as against urban’s 13.72 per cent.

“Many dealers noted improved demand but also pointed to last year’s heavy discounting, which helped clear older models and shift registrations,” Vigneshwar said.

He also pointed out that the inventory levels improved, dropping by around five days to 50–55 days, suggesting an improved supply-demand balance.

Two-wheeler retails stood at 15,25,862 units last month, an increase of 4 per cent, as compared with 14,65,039 units in same month last year.

Sales in urban areas outpaced rural on a Y-o-Y basis, growing by 5 per cent compared to 4 per cent.

Dealers cite new model launches, marriage season demand and improved financing as key growth drivers, Vigneshwar stated.

However, concerns about rising interest rates, rural liquidity challenges and market uncertainty still linger, he noted.

Commercial vehicle sales rose 8 per cent year-on-year in January to 99,425 units.

While higher freight rates and passenger carrier demand provided a boost, many dealers cited low cash flow, strict financing policies and sluggish industries (like cement and coal) as major hurdles, Vigneshwar said.

Tractor sales rose 5 per cent year-on-year to 93,381 units in January while three-wheeler retail sales rose 7 per cent to 1,07,033 units last month.

Total automobile retails across categories rose 7 per cent year-on-year last month at 22,91,621 units, driven by robust demand across segments. Overall retail sales stood at 21,49,117 units in January 2024.

"Our observations indicate that each vehicle category --2W, 3W, PV, tractor and CV-- witnessed positive momentum, pointing toward sustained consumer confidence and steady market recovery," Vigneshwar said.

Fada noted that riding on the momentum of a promising start to 2025, the auto retail sector enters February with cautious optimism.