Retail car sales remain in low gear in June despite discounts; FADA puts blame on scorching heatwave. Details here

Retail sales of passenger cars in India fell in June for the second consecutive month as heatwaves across the country discouraged consumers from spending despite "substantial discounts", Reuters reported on Friday, quoting data from from the Federation of Automobile Dealers Association (FADA).

The passenger vehicle sales fell by 6.8 per cent year-on-year in June, a wider drop than the 1 per cent decline in May, according to data from FADA, which tracks monthly retail sales from dealers to buyers. Auto sales are seen as a key indicator of private consumption in India.India's auto industry forms 7 per cent of the country's GDP, as per government data. The intense heat in northern India has reduced footfall at dealerships and led to fewer people buying cars, according to analysts quoted by Reuters. This especially hurts small cars and electric vehicles.

Subdued retail demand also led to muted wholesales for some carmakers, according to industry analysts. Tata Motors attributed the drop to the impact of the Indian elections and the weather. Mahindra & Mahindra also posted weaker-than-expected overall June wholesale growth. Still, the SUV portfolios of companies, including Maruti Suzuki, benefitted from strong demand and showed record-high sales in the financial year 2024. "Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15 per cent less walk-ins," FADA President Manish Raj Singhania said in a statement.

According to FADA data, the two-wheeler segment has shown a positive 4.66 per cent year-on-year growth. Three-wheeler sales have increased by 5.1 per cent year on year. Passenger vehicle sales have declined 6.77 per cent year on year. Sales of tractors have declined significantly by 28.3 per cent, and sales of commercial vehicles have declined by 4.74 per cent year on year.  FADA expects that the arrival of southwest monsoon before the schedule may boost kharif sowing and government's hike in MSP is expected  to increase rural spending and will potentially improve auto retail performance.