Demand for new cars fell for the second consecutive month in June as the intense heat across many parts of the country discouraged potential car buyers from purchasing a new car. As per Reuters, the “substantial discounts” being offered on most cars did little to bring buyers to the showrooms. The findings are based on a recent report from the Federation of Automobile Dealers Association (FADA).
Demand for SUVs at a Record-High
As per FADA, in June, passenger vehicle sales dropped by 6.8% YoY, a substantial decline from a meager 1% YoY decline in May. As per the official data, the automobile industry of India forms 7% of the country’s GDP. The intense summer that hit several states of the country, especially in the North, resulted in a major drop in the footfall at the dealerships. This, of course, is directly related to a drop in sales. Small cars and electric vehicles are the worst hit.
The reduction in the demand for new cars even corresponds to a decline in wholesales for some carmakers. Meanwhile, Tata Motors even holds the Indian elections responsible for the slump in demand. Even Mahindra & Mahindra suffered from a lower-than-usual demand in June this year. That said, the SUVs remained the preferred choice and enjoyed best-ever sales in the last fiscal. “Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15% less walk-ins,” Manish Raj Singhania, President, FADA said in a statement.
FADA Finds Hope in Rural Sectors
As per the data by FADA, the two-wheeler segment enjoyed a 4.66% growth in the same time period. Even the three-wheeler sales increased by 5.1% Overall, passenger vehicle sales have clocked a negative growth of 6.77% YoY. Even sales of tractors have dropped by a whopping 28.3%, while sales of commercial vehicles have declined by 4.74%. FADA opines that the earlier-than-expected arrival of monsoon may boost kharif sowing and the government’s hike in MSP could result in an increase in demand from the rural areas.
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