Vehicle registrations – a proxy for retail sales – were largely flat last month as heatwave conditions in several parts of the country forced potential buyers to defer their purchases.
Data collated by industry body Federation of Automobile Dealers Associations (FADA) showed as many as 1,895,552 vehicles were registered last month, a 0.73% rise from 1,881,883 vehicles sold in June 2023.
Two-wheeler registrations increased 4.7% from a year earlier to 1,375,889 units, while three-wheelers posted a 5.1% rise to 94,321 units.
Registrations of passenger vehicles, tractors and commercial vehicles fell by 6.8% (to 281,566 units), 28.4% (71,029 units) and 4.7% (72,747 units), respectively, dragging down industry volumes.
“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, president, FADA.
In the two-wheeler segment, extreme heat led to a 13% on-year drop in showroom footfalls in June. Additionally, stalled monsoons and election-related market slowdowns impacted rural sales. The share of the rural market in total two-wheeler sales fell to 58.6% in June, from 59.8% in May 2023.
Passenger vehicle retails too reported a decline, falling by 6.8% during the month. “Inventory levels in the segment 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-ins and delayed monsoons,” Singhania said.
He said feedback from dealers highlights challenges stemming from low customer inquiries and postponed purchase decisions. “With the festive season still some time away, it is crucial for passenger vehicle OEMs (Original Equipment Manufacturers) to exercise caution. Effective inventory management strategies are essential to mitigate financial strain from high interest costs,” he added.
The commercial vehicle category also experienced a downturn, with retail sales falling by 4.7% due to delayed monsoons, weak market sentiment and postponed purchases. The industry body said commercial vehicle sales continued to face a decline last month, “impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns.”
Dealers anticipate retail sales to rise in the coming months due to improved supply and new product launches though there are lingering concerns of low customer inquiries and tepid market sentiment due to heavy rains.
