Indian PV retail sales slump in June, monsoon may bring positive changes
Passenger vehicle retail sales in India were down for the second consecutive month in June 2024 but there is hope for positive changes as the monsoon season rolls in, according to the data published by the Federation of Automobile Dealers Association (FADA). In their monthly report on vehicle retail data in June 2024, FADA stated that while the two-wheeler segment saw a positive upward trend, where it grew 4.66 per cent compared to the same period last year, passenger vehicle sales declined by 6.77 per cent year-on-year.
The Indian automotive industry’s contribution to the nation’s GDP is significant, having grown to 7.1 per cent in 2023 according to a report from the Press Information Bureau. Measuring sales in the automotive sector aids in understanding consumption trends in the country. FADA President Mr. Manish Raj Singhania stated in the monthly report that passenger vehicle sales “remain subdued" owing to the extreme heat and delayed monsoons. Delayed monsoon in regions such as West Bengal, Madhya Pradesh, and Uttar Pradesh contributed to the heatwave and a delay in the sowing of summer crops, which impacted rural sales, said Singhania.
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In spite of year-on-year growth in some sectors, June 2024 marked sales decline across the industry. Passenger vehicle sales fell by 7.18 per cent from May, and while two-wheeler sales registered a 4.66 per cent year-on-year growth, it fell by 10.36 per cent from the previous month. FADA attributed the weak performance to factors such as, “extreme heat which resulted in 13% less walk-in’s, stalled monsoons and election-related market slowdowns." Passenger vehicle sales saw poor growth despite a strong SUV demand, improved availability of products and significant discounts.
FADA hopes monsoon-backed recovery
This persistent decline in sales growth was seen throughout the first half of 2024 and was earlier attributed to India’s general elections held between April 19 and June 1. Economic uncertainty within the population amid a country’s biggest elections impacts customer sentiments, and FADA stated in their April 2024 report that it has done so in India by delaying “purchasing decisions and expansion plans." The downward trend was expected to continue in the month of June, being one of the weakest time periods for auto retail in the country.
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As the country heads into the monsoon season faster than expected, positive changes might not be far away. The report states that while the monsoon season boosts prospects for crop sowing, the government’s newly increased minimum support prices for these crops can further lead to improved disposable income within rural India. While this should improve performance in the coming quarter, the FADA report states that “high inventory levels and ongoing low market sentiment necessitate cautious management."
