Retail sales of cars fall in June for 2nd straight month, PV sales dip 6.8%

India's auto industry forms 7% of the country's GDP, according to government data

Retail sales of cars in India fell in June for the second straight month as heatwaves across the country deterred customers from purchases despite "substantial discounts", a dealers' body said on Friday.

Passenger vehicle sales fell 6.8 per cent year-on-year in June, a steeper drop than the 1 per cent decline in May, according to data from the Federation of Automobile Dealers Association (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.

This especially hurt small cars and electric vehicles.

Subdued retail demand also led to muted wholesales for some carmakers, according to analysts. Tata Motors attributed the drop to the impact of the Indian elections, in addition to the weather.

Mahindra & Mahindra also posted weaker-than-expected overall June wholesale growth.

Analysts said concerns around how the government's policies could affect peoples' income might discourage consumers from buying vehicles and hurt automakers' sales to dealerships.

Still, the SUV portfolios of companies, including Maruti Suzuki, benefitted from strong demand, extending the record-high sales seen 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. Dealer feedback highlights challenges such as low customer enquiries and postponed purchase decisions," FADA President Manish Raj Singhania said in a statement.