India saw a modest rise of 0.73% in auto retail sales in June, driven by delayed monsoons affecting certain regions, according to the Federation of Automobile Dealers Associations (FADA). The two-wheeler and three-wheeler segments recorded year-on-year growth of 4.66% and 5.1% respectively, while passenger vehicles, tractors, and commercial vehicles witnessed a decline in sales by 6.7%, 28.3%, and 4.7% respectively.
June traditionally serves as a slower month for auto retail in India. This year, while the monsoon progressed normally up to Maharashtra, it lost momentum, delaying rains in states like West Bengal, Bihar, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh. This exacerbated the effects of a severe heatwave in northwest India, prolonging the intense heat and delaying the sowing of kharif crops in northern and north-western regions, thereby impacting rural sales.
“June is traditionally one of the weakest months for India’s auto retail. This year, while the monsoon progressed normally up to Maharashtra, it lost momentum, delaying rains in West Bengal, Bihar, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh. This exacerbated the effects of a severe heatwave in northwest India, contributing to a prolonged hiatus that not only intensified the heatwave but also delayed the sowing operations of kharif (summer sown) crops in northern and north-western regions, thereby impacting rural sales,” said Manish Raj Singhania, FADA President.
Despite the annual sales increase, the two-wheeler segment saw a month-on-month sales decline of 10.36%. In June, the impact of extreme heat resulted in 13% fewer walk-in customers. Additionally, stalled monsoons and election-related market slowdowns particularly affected rural sales, which fell from 59.8% in May to 58.6% in June.
“Factors such as extreme heat which resulted in 13% less walk-in’s, stalled monsoons, and election-related market slowdowns particularly affected rural sales, which fell from 59.8% in May to 58.6% in June,” Singhania said.
Passenger vehicle and commercial vehicle sales witnessed month-on-month declines of 7.18% and 12.42%, respectively, reflecting poor market sentiment. Inventory levels reached an all-time high, ranging from 62 to 67 days, despite improved product availability and substantial discounts.
“Inventory levels have reached an all-time high, ranging from 62 to 67 days. Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15% less walk-in’s and delayed monsoons,” the FADA president said.
The industry body hopes for a revival in July sales as the Southwest monsoon grips India, boosting prospects for kharif sowing.
“The newly elected government’s increase in minimum support prices (MSPs) for kharif crops is expected to improve disposable incomes in rural India, potentially enhancing auto retail performance,” FADA said as part of its near-term outlook.
FADA added, “For two-wheelers, the arrival of the monsoon is expected to provide a boost, although challenges such as agricultural cash flow constraints and regional market variations remain. In the passenger vehicle segment, high inventory levels and ongoing low market sentiment necessitate cautious management. Meanwhile, the commercial vehicle sector looks forward to potential growth driven by renewed infrastructure projects and seasonal demands, despite current slowdowns.”
