Retail sales of cars in India fell for the second consecutive month in June as heatwaves across the country deterred customers from making purchases despite substantial discounts, a dealers’ body reported on Friday.

Passenger vehicle sales dropped 6.8% year-on-year in June, a steeper decline compared to the 1% dip in May, according to data from the Federation of Automobile Dealers Association (FADA), which tracks monthly retail sales from dealers to buyers.

Auto sales are considered a key indicator of private consumption in India. The auto industry contributes 7% to the country’s GDP, as per government data.

The intense heat in northern India has reduced footfall at dealerships, leading to fewer car purchases, especially impacting small cars and electric vehicles. Subdued retail demand also resulted in muted wholesales for some carmakers.

Tata Motors attributed the decline to the impact of the Indian elections and the weather. Mahindra & Mahindra also posted weaker-than-expected overall June wholesale growth.

Analysts noted that concerns about how government policies could affect people’s income might discourage consumers from buying vehicles, thereby hurting automakers’ sales to dealerships.

Despite these challenges, the SUV portfolios of companies like Maruti Suzuki benefitted from strong demand, extending the record-high sales seen in the financial year 2024.

“Despite improved product availability and substantial discounts aimed at stimulating demand, market sentiment remains subdued due to extreme heat resulting in 15% fewer walk-ins. Dealer feedback highlights challenges such as low customer inquiries and postponed purchase decisions,” said FADA President Manish Raj Singhania in a statement.

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