Auto Retail Sales Rise 5% In May, Led By Two- And Three-wheelers; PVs Decline

India's automobile retail sales rose 5.11% on year to 2.21 million units in May, driven mainly by strong performance in two- and three-wheelers, the Federation of Automobile Dealers Associations said Friday.

Two-wheeler sales were up 7.31% on year at 1.65 million units, supported by pre-monsoon demand, a favourable rabi harvest, and a higher number of auspicious marriage days. Still, this segment saw a 2.02% sequential dip. FADA said financing constraints in the economy segment held back a stronger recovery.

Three-wheeler sales rose 6.3% to 104,448 units, while tractors saw a 2.8% rise at 71,992 units. However, passenger vehicle sales fell 3.1% to 302,214 units, hurt by weak entry-level demand and financing issues. Inventory for this segment rose to 52-53 days from 50.

“Entry-level models were hardest hit,” FADA said, citing tight consumer sentiment, financing delays, and heightened border tensions in regions such as Jammu & Kashmir and Gujarat as contributing factors.

Commercial vehicle sales dropped 3.71% on year and over 11% sequentially to 75,615 units, impacted by muted freight movement, low liquidity, and war-related uncertainties. Bus sales provided some cushion, but commodity-linked categories like cement and coal transport saw sharp declines.

FADA said dealers were also holding lower commercial vehicle inventory ahead of new air-conditioning cabin norms coming into force in June.

Outlook
FADA maintained a cautiously optimistic outlook for June. A favourable monsoon may lift rural demand for two-wheelers and tractors. But financing constraints, urban sentiment pressures, and cost headwinds from rare-earth supply issues could weigh on gains.