Auto retail sales down in July 2025; FADA cites high base effect

New Delhi [India], August 7 : India's auto retail sector witnessed a notable slowdown in July 2025, with total vehicle registrations declining by 4.31 per cent year-on-year, according to data released by the Federation of Automobile Dealers Associations (FADA) on Thursday.

FADA attributing the drop primarily to a high base effect from July 2024, along with weather-related challenges that impacted consumer sentiment and rural mobility.

Releasing the monthly vehicle retail data, FADA President C S Vigneshwar noted, "July's downturn is largely due to an unusual base from last year, where sales had recovered late in the month following extreme heat and subsequent heavy rainfall."

Among segments, Two-Wheelers (2W) were the worst hit, reporting a 6.48 per cent decline year-on-year and a 6.28 per cent dip month-on-month. The association noted that continued heavy rains and crop-sowing activities reduced rural footfalls, leading to deferred purchases.

Passenger Vehicles (PV) also saw a year-on-year contraction of 0.81 per cent despite a 10.38 per cent month-on-month growth. Inventory in the PV segment stood at an elevated 55 days.

On the commercial front, the Commercial Vehicle (CV) segment recorded marginal year-on-year growth of 0.23 per cent and a 4.19 per cent increase month-on-month.

However, tractors emerged as the best-performing category in July, with a sharp 10.96 per cent increase year-on-year and 14.9 per cent sequential growth.

Looking ahead, FADA expects sales momentum to improve in August, driven by multiple festivals such as Rakhi, Janmashtami, Independence Day, and Ganesh Chaturthi, along with continued monsoon benefits. According to a survey, 59 per cent of dealers foresee growth in August, while only 9 per cent anticipate a decline.

Nonetheless, FADA flagged risks from the recent imposition of a 25 per cent US tariff on Indian exports, rupee depreciation, and resulting import-cost pressures, which could weigh on consumer confidence and dampen discretionary spending.

"The industry enters August with guarded optimism," Vigneshwar added. "While tailwinds from the monsoon and festive season are expected to boost demand, export-tariff volatility and isolated weather disruptions require careful monitoring."

Despite July's blip, cumulative retail sales for April-July FY26 rose 2.79 per cent year-on-year to 85.24 lakh units. The 3W and PV segments posted growth of 8.62 per cent and 2.46 per cent respectively, while tractor sales rose 7.67 per cent in the same period.

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