India’s car industry has carried over nearly two months of unsold stock into the new year, underscoring the demand headwinds in the world’s third largest automotive industry.

Retail car sales, measured as vehicle registrations on the government’s VAHAN website, rose 5.18% year-on-year to 40.74 lakh units in 2024, according to data released by the Federation of Automobile Dealers Associations. That compares with 42.86 lakh cars that were dispatched to dealerships last year.

“While some dealers benefited from year-end schemes and expanded product range, overall demand remained subdued (in December), with customers deferring purchases to January for anticipated benefits,” FADA President CS Vigneshwar said in the release. “Inventory levels ranged between 55 and 60 days.”

In December 2024, retail car sales fell 1.97% year-on-year to 2,93,465 units.

To be sure, India’s automotive industry actually grew in 2024.

Across segments, retail auto sales rose 9.11% year-on-year to 2.61 crore units in 2024 as against 2.39 crore units in the previous year, according to FADA data.

  • Two-wheeler sales up 10.78% YoY at 1.89 crore units

  • Three-wheeler sales up 10.49% YoY at 12.22 lakh units

  • Four-wheeler sales up 5.18% YoY at 40.73 lakh units

  • Truck, bus sales up 0.07% YoY at 10.04 lakh units

  • Tractor sales up 2.55% YoY at 8.94 lakh units

The picture wasn’t as rosy in December — a seasonally weak month.

Retail auto sales declined 12.49% year-on-year to 17.56 lakh units in December 2024, as against 20.07 lakh units in the year-ago period, according to FADA data.

  • Two-wheeler sales down 17.64% YoY at 11.98 lakh units

  • Three-wheeler sales down 4.57% YoY 93,892 units

  • Four-wheeler sales down 1.97% YoY at 2.93 lakh units

  • Truck, bus sales down 5.24% YoY at 72,028 units

  • Tractor sales up 25.78% YoY at 99,292 units

2025 Outlook

Auto dealers across the country are now “cautiously optimistic” on near-term demand but anticipate meaningful growth thereafter, according to a FADA survey.

The industry body sees a revival in India’s rural economy as buoying two-wheeler sales irrespective of cubic capacity. The surge in electric two-wheeler sales is welcome but they will soon start into volumes and market share of entry-level commuter motorcycles. FADA, interestingly, anticipates an “eventual plateau in EV disruption”, which should support the traditional two-wheelers in the long-term. 

For cars, new launches and an upcoming wedding season are likely to drive sales, but that momentum can only be sustained if carmakers adopt a multi-powertrain approach for new vehicles. SUVs are here to stay. A revival, if at all, in small cars still seems some time away. The interest-rate fluctuations is another key overhang.

“Overall, FADA remains optimistic that market recovery, coupled with strategic support from automakers and clarity at the policy-level, will enable the world’s third largest car industry,” Vigneshwar said.

. Read more on Business by NDTV Profit.Retail car sales, measured as VAHAN registrations, stood at 40.73 lakh units in 2024 as against 42.86 lakh units dispatched to dealerships. That indicated inventory of 55-60 days.  Read MoreBusiness, Notifications 

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