February 2025 was tough for the automobile industry. According to Federation of Automobile Dealers Associations (FADA), sales across all the automobile segments dropped during the month. The overall automobile retail sales (domestic) in February 2025 dropped by 7% to 1899196 units of automobiles sold during the month compared to 2046328 units in February 2024, a year before. FADA has been pointing towards the declining demand as the prime reason behind the drop in sales.
Dealers Concern over Rising Inventory
With the drop in sales, the inventory is rising and dealers are concerned about this rising inventory. They are worried about inventory being pushed to them, as such methods and initiatives can be beneficial for the wider business perspective, but it is not healthy for the dealers and a concern for fair inventory management.
FADA has figured out that the weak market sentiment has been the main concern and it is mostly related to the entry-level category. They have also pointed out that delayed conversion and challenging targets are results of the weak sentiments, and thus they are asking the OEMs to avoid pressurizing the dealers with excessive stocks as that increases the risks to unmanageable levels provided automobile industry being cyclical in nature. The inventory levels in the entry-level segment are already in the range of 50-52 days.
Two-Wheelers Sales & Dealers Concerns
In this segment, the sales dropped by 6% on a YoY basis from 1444674 units in February 2024 to 1353280 units in February 2025. Dealers are suggesting this drop is due to inventory imbalances, weak consumer sentiments as usual, but there are other reasons such as aggressive price adjustments, limited availability of financing options, which have also been affecting the sales.
They have also pointed out that slow-moving models make the most of the rising inventory and the auto manufacturers need to take a look at these models. Furthermore, macroeconomic factors, such as external economic pressure, inflation, limited liquidity, have been putting a toll on the sales figure in the industry.
The urban sales took the big blow compared to the rural sales when it comes to the two-wheelers segment.
Commercial Vehicles and Dealers Concern
Commercial vehicle retail sales dropped by 9%, the highest amongst all the segments. In February 2025, the number of units sold stood at 82763 units only.
Dealers again pointed out to the weak sentiments, challenges in the business arena, the transportation sector being slow, limited financing options, and also pricing as major factors affecting the sales of commercial vehicles. These factors are mainly affecting the bulk institutional orders.
Within the commercial vehicles segment, tractors’ sales declined the most by 14.5% during February 2025 compared to last year’s February sales. This February, only 65574 units were sold.
Industry outlook by FADA
FADA in its report stated that they are optimistic about March’s sales but cautiously. The challenges in the industry, and overall market, are still there and a continuous decline in the stock markets, for the past five months in a row, has taken a toll on the investors and consumers’ confidence too. Having said that, the upcoming festive season, including Holi, Navratri, Gudi Padwa, to year-end depreciation benefits are expected to attract the consumers and boost the automobile sales.
Source: Economictimes
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