Indiastockguru Team
Poor monsoons and severe heat waves impacted growth of the auto retail sector in India in June 2024. Auto retail sector reported a modest YoY growth of just 0.73%. Delayed rains in West Bengal, Bihar, Uttar Pradesh, Chhattisgarh, and Madhya Pradesh exacerbated the effects of a severe heatwave in northwest India in June 2024. This has led to lower customer inquiries, lesser footfalls in auto showrooms and postponement of purchases. According to the Federation of Automobile Dealers Associations (FADA), there were 15% fewer walk-in’s due to extreme heat wave conditions in the month of June. Sowing of kharif crops in northern and north-western regions were delayed, impacting rural sales. Three-wheeler and two-wheeler retail sales grew 5.1% and 4.66% YoY respectively in June 2024. Passenger vehicles, commercial vehicles and tractor retail sales fell 6.7%, 4.7% and 28.3% YoY, respectively in June 2024.
Heavy discounts and strong product availability was also not able to increase demand in June 2024. This has led to high inventory levels for auto dealers. Passenger vehicle inventory levels were above 60 days in June 2024. Additionally, high interest costs are also impacting dealers in the auto sector. June rainfall deficit is expected to recouped in the month of July, but heavy rains might also dampen auto sales due to flash foods, water logging and electricity cuts. India Meteorological Department (IMD) predicts heavy rainfall in Arunachal Pradesh, Sikkim, Assam, West Bengal and also in central India, Uttar Pradesh and Bihar in the month of July.
The auto sector is trying its best to enhance sales growth through availability of new models and sales promotions. The central government on June 19, 2024 announced an increase in minimum support prices (MSPs) for kharif crops which will increase disposable income in the hands of rural India leading to improved auto retail growth. The upcoming festive season starting with Ganesh Chaturthi in August augurs well for the Indian Auto sector.
