India's June retail car sales drop most in over 2 years: Report

Bengaluru: Retail sales of cars in India fell 6.8 per cent in June, marking their worst decline in almost two and half years, a dealers' body said on Friday, as heatwaves across the country kept customers from visiting showrooms.

Passenger vehicle sales in June dropped to 281,566 units, their lowest since September 2022, according to data from the Federation of Automobile Dealers Association (FADA), which tracks monthly retail sales from dealers to buyers.

Why is it importatnt

Auto sales are seen as a key indicator of private consumption in the country. India's auto industry forms 7 per cent of the country's GDP, as per government data.

Context

The intense heat in India has reduced footfall at dealerships by 15 per cent, leading to fewer people buying cars, according to FADA.

Weak retail sales of cars result in higher inventory costs that hurt dealers' financials. In June, dealers had an inventory buildup of 62-67 days, FADA said. The recommended level is of three weeks.

Still, the SUV portfolios of companies, including that of Maruti Suzuki, benefitted from strong demand, extending record-high sales seen in the financial year 2024.

Market reaction

SUV maker Mahindra

Mahindra's shares fell as much as 2.2 per cent on the day, before trimming some losses. Larger rivals Maruti Suzuki and Tata Motors each fell as much as 0.6 per cent.

Key quotes

"Dealer feedback highlights challenges such as low customer enquiries and postponed purchase decisions," FADA President Manish Raj Singhania said in a statement.