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May passenger vehicle sales dropped 3% YoY to 302,214 units, the lowest since December, amid weak retail demand and rising unsold inventory. Credit issues and low showroom footfalls hit entry-level car sales, while EV penetration in PVs crossed 4% for the first time, says FADA.
The number of registrations of new passenger vehicles (PV) in May fell to the lowest level since December as carmakers struggled to get buyers to showrooms while the overall unsold stock in the system continued to stay at elevated levels.
According to the Federation of Automobile Dealers Association (FADA), the PV segment saw sales decline by 3% year-on-year to 302,214 units in May. The segment’s previous low was in December when 293,465 units were retailed.
Retail conversions lagged on margin-money challenges and deferred decisions. The entry-level segment continues to be the worst hit. The vehicle showrooms in states which have the international border with Pakistan, such as Jammu & Kashmir, Punjab, Rajasthan and Gujarat, had near zero walk-ins on certain days, said FADA.
“We have found that credit availability is becoming an issue. Banks and NBFCs are taking more time to approve loans. They are being cautious while lending to buyers who do not have a good credit history,” said CS Vigneshwar, president, FADA.
Estimates suggest that the PV segment saw wholesale (sales to dealers) dispatches of nearly 349,500 units during May, which was nearly at par with the same period last year. Due to the gap between the wholesale and retail, the unsold stock has gone up. From 50 days, the inventory has gone up to 52-53 days.
“The stocks have gone up because of lower retail demand. We are looking at 550,000-600,000 unsold vehicles in the system. Discounts have gone up. We are hoping that June will be a better month,” Vigneshwar added.
The cuts in repo rate and cash reserve ratio (CRR) by the RBI on Friday is expected to help push retail demand, the automakers said. Tarun Garg, whole-time director and COO, Hyundai Motor India, said, “Along with reduction in CRR, today’s RBI move will boost liquidity, reduce customer monthly installments, support consumption and further accelerate economic recovery.”
For the first time, electric vehicle penetration crossed the 4% mark in the PV segment during May. In 2023 and 2024, it was 2.5% before it moved to 3.5% in 2025. The EV penetration in two-wheelers, however, has remained unchanged at 6%.
Two-wheelers retails grew by 7% y-o-y in May to 1.65 million units. Dealers attribute this resilience to wedding season, a strong Rabi harvest, and pre-monsoon demand—especially in semi-urban and rural markets.
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This article was first uploaded on June six, twenty twenty-five, at thirty-seven minutes past ten in the night.
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