Passenger Vehicle Sales Dip 3% In May Amid Geopolitical Tensions: Report

May sees 3% drop in passenger vehicle sales due to India-Pakistan tensions; two-wheelers rise 7% on rural demand boost

Passenger vehicles face sales slowdown in May amid border tensions; two-wheelers and three-wheelers show growth momentum

Source : Freepik

Passenger vehicle retail sales witnessed 3 per cent on-year decline in May with customers delaying purchases in several states due to India-Pakistan conflict and further softening of demand for entry-level models, dealers' body FADA said on Friday.

The passenger vehicle registrations last month stood at 3,02,214 units, as compared to 3,11,908 units in May 2024.

Entry-level models were hardest hit, as constrained financing and subdued consumer sentiment compounded the slowdown, the Federation of Automobile Dealers Associations (FADA) said in a statement.

Heightened war-related worries and border tensions in Jammu & Kashmir, Punjab, Rajasthan, and Gujarat further prompted buyers to delay purchases, it added.

Although bookings remained fairly healthy, retail conversions lagged on margin-money challenges and deferred decisions, the dealers' body stated.

The passenger vehicle Original Equipment Manufacturers (OEMs) must adopt a cautious, ground-reality-aligned approach to production planning and channel incentives so that dealers are not burdened by rising carrying costs or forced into excessive discounting, it noted.

Two-wheeler retail sales rose 7 per cent year-on-year in May at 16,52,637 units, as against 15,40,077 units in the year-ago period.

Dealers attribute this resilience to a higher number of auspicious marriage days, a strong Rabi harvest, and pre-monsoon demand -- ”especially in semi-urban and rural markets, FADA said.

"That said, financing constraints in the economy segment capped full upside potential. Looking ahead, stakeholders should continue to monitor liquidity access and model availability to preserve momentum," it added.

Commercial vehicle retail sales declined 4 per cent year-on-year to 75,615 units in May on account of muted freight cycles, tight liquidity, and adverse geopolitical sentiment, FADA stated.

While bus sales offered some relief, passenger carriers and commodity-linked segments (cement, coal) saw sharp de-growth due to delayed financing and softening TIV (total industry volume), it added.

Wholesales, however, accelerated as OEMs and Dealers built inventory ahead of the June 2025 mandatory AC driver-cabin regulation, it added.

Three-wheeler registrations increased 6 per cent year-on-year to 1,04,448 units in May.

On business outlook, FADA noted that global supply-chain headwinds -- from rare-earth constraints in EV components to ongoing geopolitical tensions -- may keep urban consumer sentiment in check.

To navigate this lean yet resilient month, OEMs and financiers must synchronise production planning with ground-reality demand signals, deploy calibrated channel incentives, and secure adequate working-capital support, it said.

Collectively, these factors point to a cautiously optimistic near-term outlook for auto retail in June, the dealers' body said. 

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)