SUMMARY
Retail car sales in February 2025 may be the weakest in recent years, excluding September 2024, according to a CNBC-TV18 poll. In February, retail figures showed a notable decline across all vehicle categories. While car sales in September last year were affected by a shift in festival dates, there are at least four factors behind the slump in demand.
1 / 5Passenger vehicle (PV) retail sales fell by 14%, two-wheeler (2W) sales dropped by 12%, and medium and heavy commercial vehicle (MHCV) sales decreased by 11%, according to a CNBC-TV18 poll. Two-wheeler sales is expected to decline 6% compared to a year earlier, according to Nomura’s estimates.
2 / 5Significant discounts offered in December 2024 encouraged buyers to purchase vehicles earlier than planned, a phenomenon known as pre-buying. This is one of the big reasons for slow sales in February. Nomura’s analysis suggests that the high sales volume at the end of 2024 left fewer customers in the market in early 2025.
3 / 5Secondly, the December discounts were followed by price hikes in January and February 2025, potentially discouraging buyers due to higher costs. Thirdly, a downturn in stock markets during this period may have shaken consumer confidence, reducing their willingness to spend on big-ticket items like vehicles.
4 / 5Fourthly, financing companies responded to rising loan delinquencies by lowering Loan to Value (LTV) ratios, meaning buyers could borrow less relative to a vehicle’s value. In the passenger vehicle segment, wholesale figures are expected to increase by 2% compared to February 2024. However, dealer surveys reveal that retail demand remains weak, leading to an accumulation of unsold stock.
5 / 5Channel inventory has now surpassed 40 days, suggesting that dealers are holding vehicles longer than ideal. If this trend continues, Nomura warns that manufacturers might need to offer steeper discounts starting in March 2025 to clear excess stock. To counteract this, some two-wheeler makers have announced bigger discounts or reduced prices to stimulate sales.
