FADA forecasts slowdown in July auto sales

The Federation of Automobile Dealers Associations (FADA) expects a slowdown in retail automobile sales in July 2025 amid tepid bookings.

“As we enter July 2025, dealer sentiment appears tilted towards slowdown—flat and de-growth expectations (42.8% and 26.1%) exceed growth forecasts (31.1%). Similarly, booking-pipeline traction remains uneven,” the auto dealers’ lobby said on Monday.

In the two-wheeler segment, early monsoon showers and renewed rural activity have spurred interest, yet heavy rainfall, variant shortages and price increases effective July are moderating conversions, said FADA.

Retail sales of passenger vehicle rose 2.45% year-on-year to 2.97 lakh units in June 2025. Two-wheeler sales increased 4.7% year-on-year to 14.46 lakh units last month.

Passenger vehicles face the high-base effects, limited new-model launches and tight financing, offset in part by festival planning and fresh incentive schemes, the auto dealers’ body said.

Meanwhile, commercial vehicles continue to grapple with muted infrastructure demand, higher ownership costs from new taxation and mandatory AC-cabin norms, even as extended order pipelines provide some relief, noted FADA.

“Overall, July is likely to witness mixed fortunes—driven by agrarian tailwinds and school reopening’s, yet tempered by seasonal headwinds, elevated price points and liquidity constraints,” it said.

In its near-term outlook, FADA said that the ‘above-normal’ monsoon rains should bolster rural demand. “Early Kharif sowing, up 11.3% YoY to 262.15 lakh hectares, underlines stronger farm incomes and augurs well for two-wheeler uptake in the hinterlands,” said FADA.

The dealers lobby, however, cautioned that the challenges in securing rare-earth materials have stalled component production, further constraining supply and retail volumes.

The month of June recorded a healthy 4.84% growth overall. Segment-wise, every category closed in the green: two-wheelers at 4.73%, three-wheelers at 6.68%, passenger vehicles at 2.45%, tractors at 8.68% and commercial vehicles at 6.6%.

While festival and marriage-season demand provided a boost, financing constraints and intermittent variant shortages moderated two-wheeler sales, said FADA president C S Vigneshwar.

“Early monsoon rains and rising EV penetration also shaped buying patterns. Several dealers cited compulsory billing and forced stock lifts—often via auto-debit wholesales—leading to mandated high days of inventory aligned with festival-season targets. Overall, June demonstrated a resilient two-wheeler performance amid mixed market signals,” said Vigneshwar.

Heavy rains and tight market liquidity weighed on footfall and conversion in the passenger vehicle segment, Vigneshwar added.

The mandate of air-conditioned cabins in trucks has elevated ownership costs, alongside muted infrastructure demand, said Vigneshwar.

In Q1 FY26, overall automobile retail volumes rose 4.85%, with passenger vehicles up 2.59% and two-wheelers up 5.02%, three-wheelers up 11.79%, commercial vehicles up 1%, and tractors up 6.29%.

“While 2W showed some early-cycle softness, we remain confident of a robust ramp-up in the coming months as seasonal demand and targeted OEM initiatives take effect,” said Vigneshwar.