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Significant Growth in Electric Vehicle Sales

In May 2025, electric passenger vehicle (EV) sales reached over 4% of total sales, a notable increase from 2.6% during the same month in 2024, according to data from the Federation of Automobile Dealers Associations (FADA). This figure represents a rise from April's 3.5%, indicating a growing trend in consumer acceptance of EVs and a shift towards more sustainable transportation options.

The retail figures for electric passenger vehicles show that approximately 12,304 units were sold in May, a substantial increase from the 8,029 units sold in May 2024. The FADA also reported that sales in April were slightly lower at 12,233 units. Overall, the automotive sector experienced a modest growth of 5% in May compared to the same month last year.

When examining the performance by segment, two-wheelers led the way with a year-on-year increase of 7.3%. Three-wheelers followed closely with a 6.2% rise, while the tractor segment saw a 2.7% increase.

FADA attributes the strong demand for two-wheelers in semi-urban and rural areas to favorable marriage dates, a robust Rabi harvest, and pre-monsoon demand. However, the economy segment faced challenges due to financing issues, resulting in a nearly 2% decline.

The passenger vehicle segment experienced a downturn due to high inventory levels and a lack of consumer enthusiasm, particularly for entry-level models. Factors such as geopolitical tensions affecting border states (J&K, Punjab, Rajasthan, Gujarat) and challenges related to margin money contributed to this decline. Despite these challenges, FADA anticipates that global supply chain issues, including rare-earth material shortages for EV components, may continue to impact urban consumer sentiment and increase costs.