Auto sales rise 3% in April on festive boost, market recovery

By: Shantanu Bhattacharji

Vehicle sales rose across segments: tractors up 7.5%, two-wheelers 2.25%, and three-wheelers surged 24.5%, signalling rural and urban recovery. Passenger vehicles grew 1.5%, reflecting steady but cautious urban demand

Automobile retail sector bounced back in April 2025 with a 3 per cent year-on-year growth, clocking 22.8 lakh units sold, as per the latest data from the Federation of Automotive Dealers Associations (FADA). The rebound comes after two months of subdued performance and appears to be buoyed by the convergence of regional festivals, a temporary pause in global tariff tensions, and a correction in the stock markets that improved buyer sentiment. 

Growth was broad-based across most segments. The two-wheeler and tractor categories—both critical indicators of rural demand—posted healthy growth of 2.25 per cent and 7.5 per cent, respectively. Three-wheelers, often reflective of the informal economy and urban transport demand, surged by a remarkable 24.5 per cent, signalling a strong post-pandemic recovery in last-mile mobility. Even the passenger vehicle segment, although slowing, managed a 1.5 per cent gain, pointing to continued albeit cautious urban discretionary spending.

However, this overall optimism is somewhat tempered by persistent weakness in the commercial vehicle (CV) segment, which slipped 1.05 per cent year-on-year. This decline, despite broader market strength, is telling. CV sales, particularly in the small commercial vehicle (SCV) cargo category, have been hit by OEM-led price increases amid flat freight rates and low fleet utilisation. Dealers have also pointed to elevated inventory levels from March’s advance purchases and poor holiday-season conversions as added pressures. 

This uneven performance highlights a structural issue: while consumer-side demand is resilient, supply-side pressures and muted logistics sector activity are constraining commercial segments. The health of the CV market is a bellwether for economic movement—its sluggishness may reflect broader issues in infrastructure momentum, freight economics, and urban consumption. 

Overall, while April’s rebound brings relief to automakers and dealers, it also flags the need for more nuanced strategies. Rural and semi-urban segments remain growth pillars, but the commercial sector demands urgent course correction through pricing, incentives, and product innovation. The road ahead is not without speed bumps, and sustainability of this recovery will depend on how well the industry navigates them. 

The latest automobile retail sales data for April 2025 reveal a complex picture in the country’s passenger vehicle (PV) segment. Maruti Suzuki continues its dominance with a commanding 39.4 per cent market share, delivering over 138,000 units. It is trailed by Mahindra & Mahindra (14 per cent), Tata Motors (13 per cent), and Hyundai (12.5 per cent), underscoring the consolidation of market leadership among a few players. The sustained momentum in SUV sales has underpinned volumes for top OEMs, even as broader consumer sentiment remains cautious.

Yet, behind these headline numbers lie signs of stress. Elevated dealer inventory levels, discount-led market dynamics, and slow enquiry-to-sale conversions indicate a market still grappling with post-pandemic shifts in buyer behaviour. Entry-level vehicle buyers—traditionally a large chunk of the market—are showing restraint, perhaps reflecting the lingering impact of inflation, stagnant income growth, and high vehicle prices. 

OEMs are now being nudged to recalibrate production to avoid further inventory build-up and discount-driven margins erosion. The current sales push appears supported more by incentives than organic demand, a strategy that risks long-term profitability. 

In the two-wheeler segment, the uptick in sales was aided by a confluence of rural factors—the Rabi harvest payouts, a robust wedding season, and signs of strengthening rural sentiment. FADA’s optimism for the months ahead hinges on the IMD’s above-normal monsoon forecast. A well-distributed rainy season could boost farm output, support rural incomes, and stimulate demand for entry-level and commuter vehicles. 

However, emerging insights from Kantar’s Rural Barometer and GroupM indicate increasing consumer selectivity in rural India. Household spending is rising faster than income growth, suggesting an undercurrent of stress. Inflation is dampening discretionary purchases, and the rural market may not be as buoyant as headline indicators suggest. 

In a nutshell, the auto industry finds itself at an inflection point: strong brand-led SUV sales and seasonal rural demand are providing short-term relief, but underlying concerns—such as high inventories, cautious low-end buyers, and inflationary pressures—could cap further growth. The path forward will require strategic balancing between production discipline, consumer affordability, and rural sensitivity.