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India's June retail car sales drop most in over 2 years, says dealers' body

Vehicles are pictured at a toll post in Mumbai

BENGALURU (Reuters) -Retail sales of cars in India fell 6.8% in June, marking their worst decline in almost two and half years, a dealers' body said on Friday, as heatwaves across the country kept customers from visiting showrooms.

Passenger vehicle sales in June dropped to 281,566 units, their lowest since September 2022, according to data from the Federation of Automobile Dealers Association (FADA), which tracks monthly retail sales from dealers to buyers.

WHY IT'S IMPORTANT

Auto sales are seen as a key indicator of private consumption in the country. India's auto industry forms 7% of the country's GDP, as per government data.

CONTEXT

The intense heat in India has reduced footfall at dealerships by 15%, leading to fewer people buying cars, according to FADA.

Weak retail sales of cars result in higher inventory costs that hurt dealers' financials. In June, dealers had an inventory buildup of 62-67 days, FADA said. The recommended level is of three weeks.

Still, the SUV portfolios of companies, including that of Maruti Suzuki, benefitted from strong demand, extending record-high sales seen in the financial year 2024.

MARKET REACTION

SUV maker Mahindra & Mahindra's shares fell as much as 2.2% on the day, before trimming some losses. Larger rivals Maruti Suzuki and Tata Motors each fell as much as 0.6%.

KEY QUOTES

"Dealer feedback highlights challenges such as low customer enquiries and postponed purchase decisions," FADA President Manish Raj Singhania said in a statement.

BY THE NUMBERS

Category Total June Y/Y change Y/Y change

sales in June in May (%)

(units) (%)

Overall 1,895,552 0.7 2.6

sales

Passenger 281,566 -6.8 -1

Vehicles

(cars)

Two-wheele 1,375,889 4.7 2.5

rs

Three-whee 94,321 5.1 20.1

lers

Commercial 72,747 -4.7 4.1

vehicles

Tractors 71,029 -28.4 -1.1

(Reporting by Varun Hebbalalu and Nandan Mandayam in Bengaluru; Editing by Sohini Goswami and Nivedita Bhattacharjee)