Improved vehicle supply and strategic planning in the two-wheeler (2W) segment have led to an increase in customer bookings and favourable crop yields have improved market sentiment, the Federation of Automobile Dealers Associations (FADA) said on Wednesday.

In the passenger vehicle (PV) segment, new model launches and favourable monsoon forecasts are set to stimulate customer interest, while bulk deals in the commercial vehicle (CV) segment should bolster demand in sectors like iron ore, steel, and cement. The appeal of new electric models and sustained demand for conventional vehicles are likely to provide further momentum, the industry body said.

However, it added that despite these positive trends, challenges remain.

“Election uncertainty continues to affect market sentiment, delaying customer conversions and stalling purchasing decisions. Financial constraints, extreme temperatures, and overcapacity in the CV segment could slow growth, while heavy discounting in the PV segment could impact profitability. Seasonal factors such as no marriage dates and a lack of major festive events may also influence demand,” Manish Raj Singhania, President, FADA said.

Monsoon outlook

On monthly retail sales, FADA highlighted that the 2W segment saw notable growth due to improved supply and the increasing demand for 125cc models. Positive market sentiments, bolstered by stable fuel prices, a favourable monsoon outlook, festival season demand and the marriage season, contributed to this rise. New model launches also helped drive growth, despite some delays in supply. The 2W sales grew by 33.21 per cent year-on-year (YoY) to 16,43,510 units in April as compared with 12,33,763 units in April 2023.

The PV category also experienced double-digit YoY growth, supported by enhanced model availability and favourable market sentiment, particularly around festivals like Navratri and Gudi Padwa. Sales rose by 16 per cent YoY to 3,35,123 units during the month (2,89,056 units).

“Despite the strong bookings and customer flow, the high competition, excess supply and discounting presented challenges for sustained growth. Additionally, the lack of new models in some portfolios impacted market traction,” Singhania said.

The CV segment showed modest 2.31 per cent y-o-y growth in domestic retail sales to 90,707 units last month (88,663 units). Three-wheeler sales also rose 9 per cent to 80,105 units, while tractors witnessed growth of 1 per cent at 56,625 units in April. Overall, the retail sales of vehicles across categories grew 27 per cent to 22,06,070 units during the month (17,40,649 units).

Positive momentum was found in bulk and corporate deals and school bus demand, though elections dampened sentiment, with customers delaying expansion plans. Limited finance options and regional challenges such as water scarcity further impacted performance, FADA said.