Auto Retail Sales Rise 18% in January, Rural Demand Takes the Lead

India’s automobile retail market began the calendar year on a strong footing, with sales rising nearly 18% year-on-year in January, supported by post-GST cut momentum, healthy rural cash flows and sustained demand across vehicle categories, according to data released by the Federation of Automobile Dealers Associations.

Total retail sales stood at 2.72 million units in January, marking a 17.61% increase over 2.31 million units sold in the corresponding month last year. FADA attributed the robust performance to harvest-linked liquidity, wedding-season demand and improving freight visibility, which together helped broaden demand beyond the festive cycle.

Passenger vehicle retails grew a modest but steady 7% year-on-year to 513,475 units. Within the segment, rural markets emerged as the primary growth driver, with rural PV sales rising 14.43% year-on-year, significantly outpacing urban growth of 2.75%. FADA President C S Vigneshwar said the trend reinforces the structural expansion of PV demand beyond large cities, aided by strong preference for SUVs and compact SUVs, revival in entry-level car demand, improved product availability and ongoing incentive schemes.

Two-wheeler sales posted the sharpest gains, rising 21% year-on-year to 1.85 million units. FADA said rural demand remained robust, supported by Pongal and Makar Sankranti festivities, marriage-season footfalls and improved affordability. Notably, urban markets also showed signs of revival, indicating demand normalisation beyond festive buying, a key positive for the industry’s volume-heavy segment.

Three-wheeler and commercial vehicle retails grew 19% and 15% year-on-year, respectively, reflecting steady momentum in passenger mobility and goods movement. Tractor registrations climbed 23% year-on-year to 114,759 units, underpinned by improved farm incomes and favourable agri-linked demand conditions.

Near-Term Outlook
Looking ahead, dealer confidence remains decisively constructive. Nearly 80% of dealers expect growth over the next three months, while fewer than 2% anticipate a decline. FADA said the near-term macro environment is supportive, citing a growth-oriented Union Budget with a clear focus on infrastructure and agriculture, policy continuity following GST reform, and interest rate stability after easing in 2025. These factors are improving affordability, financing comfort and purchase intent.

On-ground feedback points to stronger enquiry pipelines, tighter follow-ups and increased local marketing activity translating into better conversion rates. However, FADA flagged key risks, including election-related disruptions in select states, seasonality effects in short months and model or variant availability constraints in certain regions.

Category-wise, two-wheelers are expected to maintain positive momentum, supported by pending enquiry conversions, rural liquidity from crop realisations and rising traction in scooters, commuter motorcycles and electric vehicles. FADA said commercial vehicles are likely to benefit from an infrastructure-led upcycle and improving freight conditions, while passenger vehicles could see a strong February–March run on the back of booking pipelines, new launches and year-end buying. April registrations, however, may normalise as festive intensity fades and base effects emerge unevenly across regions.