Monsoon and Kharif sowing to drive auto sales from June-August: FADA dealers more confident
New Delhi, June 9
The Federation of Automobile Dealers Associations' recent survey on sales in May, shows 59 per cent of dealers expect growth in June-August 2026, up from 50.9 per cent in April-26 and brokerage firm Emkay global noted that the stronger outlook is tied to the rural income cycle as Kharif sowing gathers pace, supported by monsoon flows. For the near term, sentiment for June-26 remains measured but cautiously optimistic, with 50.5 per cent of dealers expecting growth, 39.9 per cent seeing a flat market and 9.6 per cent forecasting a decline. Commodity cost pressures are a monitorable, but rural cashflows should provide structural support.
The retail volumes in May grew 9.6 per cent year-on-year despite macro headwinds like heatwaves, fuel price revisions and West Asia-led freight anxieties. The broad-based growth was led by passenger vehicles and two-wheelers, while commercial vehicles stayed tepid.
Passenger vehicles were the strongest segment, up 23 per cent YoY. Rural PVs outpaced urban at 30.4 per cent vs 19 per cent YoY, driven by small-car revival coexisting with the sustained SUV shift, improved rural incomes, new launches and better financing. Electric PV share rose to 6.5 per cent from 4.5 per cent a year ago. However, channel inventory rose to 31-33 days in May from 28-30 days in April, above FADA's 21-day benchmark. With June seasonally soft, OEM dispatch restraint will be key to avoid further pile-up.
Two-wheelers grew 7.5 per cent YoY despite heatwaves dampening walk-ins and selective supply gaps. Marriage-season buying and GST 2.0 affordability supported demand. Fuel-price revision was the big catalyst, pushing E-2W penetration to 9.3 per cent from 6.1 per cent in May-25 as enquiries shifted to fuel-efficient and alternative powertrains.
Commercial vehicles grew 5.3 per cent YoY, with rural at 8.1 per cent vs urban at 2.6 per cent. LCVs led at 7.7 per cent YoY on last-mile e-com logistics and replacement demand. MHCV growth stayed tepid as fleet owners await clarity on freight rates and the West Asia crisis. Dealers cited steady freight activity and e-com movement as positives, but higher financing TAT and insurance costs remain monitorables.
Tractors rose 11.2 per cent YoY ahead of Kharif on healthy farm economics, while wheeled construction equipment fell 17.5 per cent on a high base.
Emkay Global said that it prefers 2Ws and CVs over PVs for better pricing flexibility amid commodity pressure. In 2Ws, TVSL/Ather are structural picks while BJAUT offers better risk-reward at 21x FY28E PER. For CVs, TMCV is preferred to play the upcycle.
— ANI
Reader Comments
Impressive growth in electric vehicles! EV penetration doubling in a year shows Indians are finally adopting green mobility. Hope the charging infrastructure keeps pace, especially in smaller towns. That 6.5% for passenger EVs is still low, but 30% YoY is a great start.
The rise in two-wheeler EV share from 6.1% to 9.3% is amazing! Petrol price hikes really push people towards electric options. But what about battery replacement costs and resale value? These are still big concerns for middle-class families. The government needs to incentivise battery localisation.
FADA's dealer confidence improving is a good sign, but commodity cost pressures could spoil the party. Steel and aluminium prices are volatile. Rural cashflows may help, but manufacturers need to pass costs without losing demand. Interesting times ahead for auto stocks!
I'm happy to see commercial vehicle growth led by rural areas—8.1% vs 2.6% in urban! Last-mile e-commerce is really helping LCVs. But why are MHCV sales still tepid? Fleet owners need clarity on freight rates. The West Asia situation isn't helping. Hope the government steps in with some policy support. 🚚
Tractors up 11.2%—that's the real story for rural India! Kharif sowing optimism is translating into demand for farm equipment. But wheeled construction equipment dropping 17.5%? That's a red flag for infrastructure spending. High base effect aside, we need more govt capex to sustain heavy equipment sales.
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