According to data collated by industry body Federation of Automobile Dealers’ Association (FADA), as many as 1,895,552 vehicles were registered last month, which is a marginal increase of 0.73% over 1,881,883 units sold in June 2023.
Two-wheeler sales rose 4.7% to 1,375,889 units in the month under review. Sales of three-wheelers too grew by 5.10% to 94,321 units in the same period. Registrations of passenger vehicles, tractors and commercial vehicles declined by 6.8% (to 281,566 units), 28.4% (to 71,029 units) and 4.7% (to 72,747 units), respectively, dragging down industry volumes.
FADA President Manish Raj Singhania, said, “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.”
In the two-wheeler segment, extreme heat resulted less footfalls in show-rooms which fell by 13% over the year-ago period. Additionally, stalled monsoons and election-related market slowdowns particularly affected sales in rural areas. Share of rural markets in total two-wheeler sales fell to 58.6% in June, from 59.8% in May 2023.
Passenger vehicle sales too reported a decline, falling by 6.77%. Singhania said, “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-in’s and delayed monsoons.” He informed feedback from dealer 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. FADA has urged carmakers to implement prudent inventory control and engage proactively with the market to align stocks in channel.
The commercial vehicle category also experienced a downturn, with sales decreasing by 4.74% due to delayed monsoons, poor market sentiment and postponed purchases. The industry body said commercial vehicle sales continued to face decline last month, “impacted by high temperatures affecting the agricultural sector and infrastructural project slowdowns.”
Singhania said with the southwest monsoon now covering the entire country ahead of schedule and boosting prospects for kharif sowing, dealers are cautiously optimistic of better demand going ahead. “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”, he said.
Dealers anticipate better sales due to improved supply and new product launches, however, concerns remain over low customer inquiries and market sentiment dampened by heavy rains. 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.
Based on current market conditions, the overall rating for July auto retail performance, FADA is cautiously optimistic. While some segments may see improved activity, overall growth is likely to be tempered by persistent challenges.