Steep car discounts mark H1, two-wheeler sales hold firm in rural India

Business Standard

3 days ago

As India's auto industry moves through the first half of the calendar year, a clear divergence has emerged in discounting trends across segments. Passenger vehicle (PV) makers are offering steep discounts to liquidate unsold 2024 inventory, while two-wheeler manufacturers are taking a more measured approach, supported by stable retail demand and tighter inventory control.
Automakers such as Tata Motors, Volkswagen, Skoda, Renault, Jeep, and Nissan are offering discounts ranging from ₹70,000 to ₹2 lakh across various EVs and SUVs. Hyundai has slashed prices by ₹4 lakh on the Ioniq 5, while Mahindra is offering up to ₹4.1 lakh off on the XUV700 and Scorpio N.
'This aggressive discounting is directly tied to high inventory levels,' said C S Vigneshwar, President, Federation of Automobile Dealers Association (Fada). 'Current inventory is around 50–55 days, which is elevated. Dealers face a 2 per cent holding cost if vehicles remain unsold for two months, which pushes them to offer deep discounts.'
Wholesale - PV 2024 2025 % change
January 393074 399386 1.60%
February 370786 377689 1.90%
March 368090 381358 3.60%
April 335629 348847 3.90%
May 347492 344656 -0.80%
Overall 1,815,071 1,851,936 2.03%
Source: Society of Indian Automobile Manufacturers (Siam)
Two-wheeler makers stay cautious amid healthy rural sentiment
In contrast, two-wheeler companies have avoided broad-based discounting. Bajaj Auto is offering celebration-linked incentives of up to ₹9,111 on its Pulsar range and ₹5,000 off on the Freedom 125. Yamaha is offering ₹10,000 in benefits along with a 10-year warranty on the RayZR 125 Fi Hybrid. Kawasaki is clearing pre-facelift Ninja 300 units with discounts up to ₹84,000.
'Inventory levels in the two-wheeler segment are around one month, which is manageable. There is no pressure to push large-scale discounts,' said Vigneshwar. 'Retail demand remains stable, especially in rural markets.'
Wholesale - 2 wheeler 2024 2025 % change
January 14,95,183 15,26,218 2.10%
February 15,20,761 13,84,605 -9.00%
March 14,87,579 16,56,939 11.40%
April 17,51,393 14,58,784 -16.70%
May 16,20,084 16,55,927 2.20%
Overall 7875000 7682473 −2.45%
Source: SIAM
Passenger vehicle sales up 2.5%, but momentum remains uneven
Retail sales in the PV segment between January and May 2025 stood at 17,72,074 units, a 2.54 per cent year-on-year increase. Wholesale dispatches during the same period reached 18,51,936 units, up 2.03 per cent from the previous year.
However, despite growth, demand has been patchy. Retail sales dipped in February and May, suggesting consumer hesitation, possibly driven by high interest rates or deferred purchases. Discounts have intensified in recent months to sustain market momentum.
Retail - PV 2025 2024 % change
January 465920 403300 15.53%
February 303398 338390 -10.34%
March 350603 329946 6.26%
April 349939 344594 1.55%
May 302214 311908 -3.11%
Overall 1,772,074 1,728,138 2.54%
Source: Fada
Two-wheeler retail steady, wholesale lags
Two-wheeler retail sales from January to May 2025 totalled 77,26,785 units, reflecting marginal year-on-year growth of 0.14 per cent. Wholesale dispatches, however, declined by 2.45 per cent to 76,82,473 units, indicating that original equipment manufacturers (OEMs) are exercising caution with inventory.
Sales in April and May were steady at the retail level, especially in rural regions, even as wholesale figures remained under pressure
Retail - 2 wheeler 2025 2024 % change
January 1525862 1465039 4.15%
February 1353280 1525862 -6.33%
March 1508232 1535398 -1.77%
April 1686774 1649591 2.25%
May 1652637 1540077 7.31%
Overall 7,726,785 7,715,967 0.14%
Source: Fada
Rural markets drive two-wheeler demand
According to Fada, rural demand continues to outperform urban markets in the two-wheeler segment.
'Retail demand in the hinterlands has helped stabilise volumes even without heavy discounting,' Vigneshwar added.