The automobile sector in India has been grappling with diminishing sales volumes for the past three months, largely attributable to the erratic weather patterns resulting from climate change. Data from the top dealers' grouping, the Federation of Automobile Dealers Associations (FADA), reveals that passenger vehicle retail sales registered a nearly 5% yearly decline in August due to sluggish consumer demand and extended monsoon rains across several regions.
Dealerships have been raising concerns about ballooning inventories which crossed 75 days last month – the highest level ever. With over 7.8 lakh unsold vehicles worth approximately Rs. 77,000 crores clogging up dealership lots, many outlets are struggling to move stock. FADA has cautioned that even the upcoming festive season is unlikely to significantly accelerate sales or reduce the overflowing inventories.
States such as Kerala and Telangana witnessed a noticeable dip in auto sales as incessant heavy downpours impacted customer sentiments. Commercial vehicle sales also slid over 6% annually in August as construction work slowed due to floods while weak industrial activity undermined demand. Two-wheeler and tractor sales negatively surprised on the back of torrential rainfall.
As per industry insiders, unpredictable precipitation patterns resulting from global warming have dampened auto purchases across regional markets this monsoon. While some localities faced excessive rainfall leading to flood-like conditions, others received deficient monsoon which disrupted economic activity. The climate crisis is gradually emerging as a serious threat for consumer facing sectors dependent on discretionary spend.
Unless weather volatility abates and buyer confidence gets restored via policy interventions, the automobile industry braces for more troubled times ahead during this crucial festive quarter. Rebounding vehicle demand will be contingent on early resolution of climatic as well as macroeconomic uncertainties dampening consumption demand.
