"Indian Retail Auto Sales Decline for Second Month Despite Discounts - Impact on Economy and Automakers Revealed | Exclusive Analysis by Top Investment Manager"
BENGALURU - In a recent report by the Federation of Automobile Dealers Association (FADA), it was revealed that retail sales of cars in India fell for the second consecutive month in June. This decline, which was steeper than the previous month, is attributed to the intense heatwaves across the country that deterred customers from making purchases, despite substantial discounts being offered.
The 6.8% year-on-year drop in passenger vehicle sales in June has raised concerns about the impact on private consumption in India, as the auto industry accounts for 7% of the country's GDP. Analysts have noted that the heatwaves, particularly in northern India, have led to reduced footfall at dealerships, resulting in fewer people buying cars, especially small cars and electric vehicles.
Major automakers like Tata Motors and Mahindra & Mahindra have reported weaker-than-expected sales, with subdued retail demand affecting their overall performance. Concerns about government policies and their impact on consumers' incomes are also contributing to the decline in vehicle sales.
Despite these challenges, companies with strong SUV portfolios, such as Maruti Suzuki, have seen continued demand, extending the record-high sales seen in the previous financial year. However, overall market sentiment remains subdued, as highlighted by FADA President Manish Raj Singhania, who pointed out a 15% decrease in walk-ins at dealerships.
The data shows a mixed picture for different vehicle categories, with two-wheelers and three-wheelers seeing positive year-on-year growth, while passenger vehicles, commercial vehicles, and tractors experiencing declines. This analysis sheds light on the current state of the Indian auto industry and its potential implications for the economy and automakers in the coming months.