New Delhi, Nov 18 (IANS): There was a robust 14 per cent growth in two-wheeler retail sales during the festive season (October 3-November 13), aided by festive cheer and an improvement in rural demand, a report showed on Monday.

Credit rating ICRA has revised the outlook for the wholesale volume growth for the two-wheeler industry to 11-14 per cent in FY25, led by steady replacement demand and an improvement in rural demand on the back of a healthy monsoon precipitation.

"Retail sales of passenger vehicles during the festive season grew at a moderate pace of 6 per cent (on-year) to 6.5 lakh units, aided by attractive discounts and competitive financing rates,” the report added.

However, despite good retail sales ((YoY growth of 6 per cent in April-October FY25, partially on account of an early festive season), the high inventory levels for the industry curtailed wholesale volume growth.

Dealers reported a significant increase in footfalls and bookings and as per channel check, enquiries and sales conversions were strong, particularly in the semi-urban and rural areas and inventory levels were at near normal levels.

The sentiments since the onset of the festive period (during Navratri) were strong and the demand was boosted further with a healthy pick-up during Diwali.

"The recently-concluded festive season brought cheer to the automotive industry, with robust retails across most segments (barring commercial vehicles), representing a moderate-to-healthy growth on a YoY basis," the report noted.

In the month of October, total two-wheeler sales in the country surged by a robust 14.2 per cent to 21.64 lakh units, compared to 18.96 lakh units in October 2023.

Passenger vehicle sales, including cars and SUVs, also increased to their highest-ever monthly level of 3.93 lakh units in October which represents a 0.9 per cent rise over a high base figure of 3.9 lakh units for October 2023, according to the latest data by the Society of Indian Automobile Manufacturers (SIAM). Market analysts attribute the surge in two-wheeler sales to higher rural incomes as a normal monsoon this year led to better crop yields which resulted in higher earnings in the agricultural sector.