Automobile retail sales in India increased by 5% in May compared to the previous year, driven by weddings, harvest, and rural demand, according to the Federation of Automobile Dealers Associations (FADA). Construction equipment vehicles declined by 6.3%, and commercial vehicles (CV) by 3.7%. Fada estimates that global supply chain headwinds, such as the scarce availability of rare earth elements for electric vehicle components and geopolitical tensions, may continue to affect urban consumer sentiment in June. Two-wheelers (2W) sales increased by 7.3%, three-wheelers by 6.2%, and tractors by 2.7% in May. FADA President Mr. CS Vigneshwar highlighted that financing constraints in the economy segment capped the full upside potential of 2W sales. However, rural and semi-urban markets remained resilient due to auspicious marriage days, a strong harvest, and pre-monsoon demand.
PV sales contracted by 3.1% YoY and 13.6% MoM as inventory levels rose to 52-53 days from around 50 days. Maruti Suzuki's sales dipped by 5%, Hyundai Motor's by around 16%, and Tata Motors' by around 13%, while Mahindra and Mahindra, now India's second-largest automaker by sales, gained 26% in May. CV sales declined by 3.71% YoY and 11.25% MoM amid muted freight cycles, tight liquidity, and adverse geopolitical sentiment. Fada remains cautious about demand in June, noting that monsoon-driven rural traction and festival pull-through should sustain 2W activity. However, persistent financing constraints and selective OEM price adjustments may temper incremental gains.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.