India’s automobile retail sector put up a resilient show in June 2025, with total vehicle sales rising 4.84% year-on-year to 20,03,873 units, according to the Federation of Automobile Dealers Associations (FADA). Every major segment closed in the green — two-wheelers up 4.73%, three-wheelers 6.68%, passenger vehicles (PVs) 2.45%, tractors 8.68%, construction equipment a massive 54.95%, and commercial vehicles (CVs) 6.6%.
Two-Wheelers, PVs, CVs bounce back year-on-year
Two-wheelers, despite a 12.48% month-on-month dip, posted a healthy year-on-year gain, thanks to robust festival and marriage-season demand. However, financing hurdles and variant shortages kept a lid on sales, while early monsoon showers and rising electric vehicle (EV) adoption shaped buying trends. Dealers flagged compulsory billing and forced stock lifts—often via auto-debit wholesalers—leading to high inventory levels as they geared up for the festive season.
Passenger vehicles slipped 1.49% month-on-month but managed a 2.45% year-on-year increase. Heavy rains and tight liquidity weighed on showroom footfalls, but select incentive schemes and new bookings provided some support. Inventory levels for PVs hovered around 55 days, with some OEMs pushing compulsory billing to meet targets.
Commercial vehicles, too, saw a 2.97% month-on-month dip but grew 6.6% year-on-year. Early-month deliveries boosted volumes before monsoon-induced slowdowns and costlier ownership—thanks to new taxes and mandatory AC cabins—dampened demand. Despite muted infrastructure activity, the segment showcased resilience in navigating rising costs and a softer economy.
Outlook: Rural demand, monsoon boost, and dealer sentiment
Looking ahead, above-normal monsoon rains forecast for July are expected to bolster rural demand, especially as early Kharif sowing is up 11.3% year-on-year. This bodes well for two-wheeler sales in the hinterlands. Meanwhile, government capital expenditure on roads, railways, metros, and green energy projects should underpin growth in the CV and construction equipment segments.
Dealer sentiment is mixed, more expect flat or negative growth (42.8% and 26.1%) than a pickup (31.1%) in July. Only 21% of two-wheeler, 38% of PV, and 32% of CV dealers report healthy enquiry flows.
In the two-wheeler market, early monsoon rains and rural activity are spurring interest, but heavy precipitation, variant shortages, and July price hikes are moderating conversions. PVs face high-base effects, limited new launches, and tight financing, offset by festival planning and incentives. CVs continue to grapple with higher costs and muted infrastructure demand, though extended order pipelines offer some relief.
FADA remains cautiously optimistic, banking on rural demand and government spending, while staying nimble to handle monsoon-related disruptions, supply constraints, and liquidity pressures.
