Indian Auto Dealers Face Uncertainty Amid Heatwaves and Tariff Tensions

Auto dealers in India are bracing for a challenging April due to intense heatwaves and renewed tariff tensions. The Federation of Automobile Dealers Association highlights weak booking pipelines and credit challenges. Despite headwinds, dealers are cautiously optimistic about modest growth, especially in the two-wheeler segment.

Auto dealers across India are preparing for a challenging April as they grapple with both domestic and international hurdles. The Federation of Automobile Dealers Association (FADA) has flagged concerns about potential heatwaves impacting consumer footfall and infrastructure activities, while renewed tariff tensions on the global stage are contributing to market volatility and affecting automobile buyer sentiment.

According to FADA's recent statement, about 60 percent of dealers across all segments report weak booking pipelines, indicating a fragile foundation for the new financial year 2025-26. 'The picture is far from rosy: nearly 60 percent of dealers across all segments report weak booking pipelines, signaling a fragile foundation on which any optimism must rest,' the statement reads.

However, there is some room for optimism. Two-wheeler dealers expect a boost from festive purchases and the marriage season, while passenger vehicle showrooms are relying on pipeline bookings and regional celebrations such as Akshay Tritiya and Baisakhi to spur sales. Despite significant headwinds, dealers project mid to high single-digit growth in the two-wheeler segment, with low single-digit growth expected for both passenger and commercial vehicle segments.

Financing remains a critical challenge, with dealers noting that credit norms have tightened recently. FADA has highlighted the need for further rate cuts by the Reserve Bank of India to lower borrowing costs, given that potential reductions in disposable incomes and market volatility could sharply impact discretionary spending, including auto purchases.

Newly released retail sales data for the just-concluded financial year 2024-25 indicates a mixed performance. Passenger vehicles grew by 4.87 percent, aligning closely with FADA's initial forecast of 5 percent. The two-wheeler segment ended with a growth of 7.71 percent, falling short of the hoped-for double-digit increase. Commercial vehicles reported nearly flat growth at negative 0.17 percent.

FADA President CS Vigneshwar highlighted a notable trend, stating, 'A key highlight this year was the strong performance in rural areas. Two-wheelers in rural markets grew by 8.39 percent, outpacing the urban growth of 6.77 percent, while three-wheelers saw an even bigger contrast, with 8.70 percent growth in rural regions versus just 0.28 percent in urban areas. Passenger Vehicles also posted 7.93 percent in rural sales, compared to 3.07 percent in cities.'

(With inputs from agencies.)