India’s Auto Retail Sees 4.31% YoY Dip in July 2025, Tractor Sales Buck the Trend

India’s automobile retail sector posted a 4.31% year-on-year (YoY) decline in July 2025, breaking a three-month growth streak, according to data released by the Federation of Automobile Dealers Associations (FADA). Total sales stood at 19.64 lakh units, down 1.98% from June.

Segment-wise, two-wheelers (2W) saw the steepest fall, down 6.48% YoY and 6.28% MoM, as heavy rains and ongoing crop-sowing activity dampened rural footfalls. Many purchase decisions have been deferred to August ahead of the festive season.

Passenger vehicles (PV) declined 0.81% YoY but surged 10.38% MoM on the back of rural demand during the Aashaada period, auspicious delivery days, and targeted marketing schemes. Urban demand remained muted due to low enquiries and cautious customer sentiment, with PV inventory levels holding steady at around 55 days.

Commercial vehicles (CV) posted marginal growth of 0.23% YoY and 4.19% MoM, aided by new model launches, institutional orders, and school-bus schemes in urban markets. Rural haulage remained weak due to weather disruptions, logistics headwinds, and slower financing.

The tractor (Trac) segment was the standout performer, recording a 10.96% YoY and 14.9% MoM jump, driven by enhanced agricultural subsidies, favourable rains, and strong rural liquidity.

Construction equipment (CE) saw a sharp 33.28% YoY and 59% MoM drop, reflecting seasonal slowdown and weak project activity.

FADA President C.S. Vigneshwar said the decline was partly due to a high-base effect in July 2024, when weather extremes disrupted demand. He noted that 63% of dealers expect sales growth in August–September, supported by four key festivals—Rakhi, Janmashtami, Independence Day, and Ganesh Chaturthi—alongside aggressive promotions, rural outreach, and new model launches.

The near-term outlook remains guardedly optimistic. Normal-to-above-normal rainfall (106% of the long-period average) is expected to boost crop prospects and rural liquidity, although risks from export-tariff volatility, flooding, and currency weakness could weigh on consumer sentiment.