India’s automobile sector showed resilience in June with retail sales rising 5% year-on-year. The latest data from the Federation of Automotive Dealers Associations (FADA) reveals growth across all segments, including passenger vehicles, two-wheelers, and commercial vehicles. This steady performance comes amid mixed market conditions, from heavy rains to financing constraints.
Passenger vehicle sales registered a modest 2% increase, reaching 2,97,722 units compared to 2,90,593 units in June 2023. FADA President C S Vigneshwar noted that while heavy rains and tight liquidity impacted footfall, promotional offers and new bookings provided some support. However, dealers faced challenges with compulsory billing practices from some manufacturers, leading to inventory levels hovering around 55 days.
The two-wheeler segment, a key driver of India’s auto market, saw a 5% rise in retails with 14,46,387 units sold. Festive and marriage-season demand played a role, though financing hurdles and stock shortages kept growth in check. Vigneshwar pointed out that dealers also grappled with forced stock lifts and high inventory days as companies pushed to meet festival-related targets.
Commercial vehicle sales grew by a healthy 7%, reaching 73,367 units. The segment managed economic pressures well, though monsoon slowdowns and higher ownership costs—due to new taxation and mandatory AC cabins—dampened demand. Meanwhile, three-wheeler and tractor registrations also posted strong gains at 7% and 9% respectively.
For the April-June quarter, total retail sales climbed 5% compared to the previous year. Passenger vehicles rose 3%, two-wheelers grew 5%, and three-wheelers saw a sharp 12% expansion. Tractor sales, crucial for rural markets, increased by 6%.
Looking ahead, FADA remains cautiously optimistic. The forecast of above-normal monsoon rains could boost rural demand, particularly for two-wheelers, as early kharif sowing signals stronger farm incomes. However, geopolitical uncertainties and supply-chain disruptions, including shortages of rare-earth materials, pose potential risks to sustained growth. With evolving market dynamics, India’s auto sector must navigate these challenges carefully to maintain momentum in the coming months.
