India's auto retail sales register 0.73% annual growth in June on the back of prolonged heatwave

India recorded just 0.73 per cent annual growth in its auto retail sales in the month of June, owing to the delayed monsoon in certain parts of the country, the Federation of Automobile Dealers Associations (FADA) said on Friday.

While the two wheeler (2W) and three-wheeler (3W) segments saw a positive year-on-year (YoY) growth of 4.66 per cent and 5.1 per cent respectively, passenger vehicles (PV), tractors and commercial vehicles (CV) sales declined 6.7 per cent, 28.3 per cent, and 4.7 per cent, respectively.

“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 a marginal increase in annual sales, the two-wheeler category saw a decline in month-on-month (MoM) sales of 10.36 per cent.

"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.

Moreover, PV and CV sales fell by 7.18 per cent and 12.42 per cent MoM, reflecting poor market sentiment.

"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.


Monsoon to bring hope
The industry body is hopeful of a revival in July sales as Southwest monsoon has gripped 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."