February 2025 auto retail sales drop 7% led by 14.5% fall in tractor sales, 10% drop in PV retail

Auto retail sales in February 2025 fell 7% Year over Year (YoY) with all segments registering negative growth on YoY basis, as per data released by Federation of Automobile Dealers Association (FADA) on Thursday (March 6, 2025.)

The two-wheelers (2W), three-wheelers (3W),  passenger vehicles (PV), tractors and commercial vehicles (CV) segments fell by 6%, 2%, 10%, 14.5% and 8.6% respectively.

The 2W segment, despite an 8.57% Year To Date (YTD) growth, reported YoY retail sales drop of 6.33% in February 2025. 

“Urban areas declined -7.38% versus a milder -5.5% drop in rural markets, aided by better agricultural sentiment and marriage-season demand,” FADA said.

“Key challenges included inventory imbalances, aggressive pricing, weak consumer sentiment and limited finance availability,” it added.

The 4% YTD growth in the PV segment was overshadowed by a steep -10.34% YoY fall in February. “Entry-level demand remained particularly soft, with dealers citing delayed conversions and challenging targets,” FADA said.

Inventory levels stood at 50-52 days, underscoring the importance of aligning wholesale targets with actual retail potential. The CV segment with a YTD decline of -0.5% saw an -8.6% YoY drop in February retail sales.

Dealers reported weak sales in transportation sector, tighter finance norms and pricing pressures — especially affecting bulk orders and institutional contracts.

Some relief came from robust tipper bookings, driven by increased government spending and steady supplies. Cautious optimism persists for March, as dealers realign targets to current demand.

FADA President C.S. Vigneshwar said, “February witnessed a broad-based downturn across all categories, a trend that was anticipated in our previous survey which projected a ‘Flat to De-growth’ sentiment for the month.”

“During the month, dealers began expressing concerns about inventory being pushed to them without their consent. While such initiatives may serve broader business objectives, it is critical to align wholesale allocations with genuine demand to protect dealer viability and ensure healthy inventory management,” he added.

“The near-term outlook for auto retail in March 2025 is cautiously optimistic, with dealer expectations indicating that nearly 45% foresee growth, 40% expect flat performance and only 14% anticipate de-growth,” he said. 

He said the convergence of multiple festivals — ranging from Holi and Gudi Padwa to the onset of Navratri — and year-end depreciation benefits should provide a much-needed boost to vehicle purchases.