The Indian market experienced a slight downturn in February following an exceptionally robust start to the new year. The February selling rate reached 5 million units/year, marking a decline of nearly 7% from January.
Total Light Vehicle (LV) wholesales for the month decreased by 6% month-on-month (MoM) to 435k units, although this figure represents a 2% year-on-year (YoY) increase. Passenger Vehicle (PV) sales totaled 373k units, reflecting a 6% MoM decline and a 3% YoY increase. The volume of Light Commercial Vehicles (LCVs) with a gross vehicle weight of up to 6T stood at 62k units, showing a 2% MoM decrease but remaining unchanged YoY.
Retail sales of PVs and LCVs in February plummeted by 33% MoM to 349k units, in contrast to 522k units in January and 333k units in December, according to data from the Federation of Automobile Dealers Associations (FADA). PV retail sales decreased by 35% MoM, while LCVs fell by 19% MoM.
Meanwhile, PV inventory levels continued to decline, reaching 50-52 days in February, compared to 55-60 days at the end of December 2024 and a peak of 80-85 days in September, as reported by FADA. Aggressive incentives, along with new model launches and upgrades, facilitated inventory clearance.
Cumulative LV wholesales in the first two months of 2025 improved by 3% YoY to 895k units. This total included 770k PVs, up by 3% YoY, and 125k LCVs, up by 2% YoY. The year-to-date (YTD) selling rate averaged a robust 5.2 million units/year.
In March, multiple festivals (including Holi, Gudi Padwa, and Navratri) and depreciation benefits at the end of the financial year could bolster demand. Automakers and dealers may also offer higher discounts and incentives to achieve their targets before the fiscal year concludes.
Our LV sales forecast remains unchanged. We expect volumes to grow by 4% YoY to 5.1 million units this year, surpassing 5 million units for the first time in the market’s history.
However, demand in the entry-level Car segment continues to be particularly weak, affected by persistent inflation, high borrowing rates, and rising vehicle prices. This weakness is counterbalanced by the consistently strong demand for newer SUV models.
In line with typical price increases at the start of the year, Maruti Suzuki, the market leader, raised prices across all of its models on February 1, citing escalating material and manufacturing costs.
Economically, five consecutive months of falling stock prices are undermining consumer confidence and discretionary spending. Global uncertainty, stemming from US President Donald Trump’s unpredictable trade policy, presents another risk to the economy and, consequently, to new vehicle sales.