June car sales dip by 7.3%, SUV segment bucks trend

Ahmedabad: After months of steady growth, car sales in Gujarat declined by 7.3% in June, according to the latest data from the Union road transport ministry. Passenger vehicle sales fell from 25,018 units in June 2023 to 23,187 units in June this year, according to the data.
The dip in sales has been attributed to several factors, with dealers suggesting it is part of a natural market correction after three years of growth.

“This appears to be a temporary phase as market sentiment and momentum remain positive,” said Pranav Shah, former chairman of the Gujarat chapters of the Federation of Automobile Dealers’ Association (FADA).
“The Rath Yatra, a significant sales event for the auto industry in Gujarat, was in June last year, while this year it is on July 7. This likely postponed some June sales to July,” Shah said.
According to car dealers, despite the overall decline, the SUV segment continues to show robust growth while other segments have seen slight declines.
Dealers say this trend indicates a consumer preference for larger, more versatile vehicles, which could mitigate the impact of the overall sales drop.
Industry experts say this downturn is not cause for concern but rather a sign of market stabilization.
“The previous years’ growth was driven by several factors such as the post-pandemic recovery, increased consumer spending power and favourable finance options. As the market adjusts to these new norms, periodic corrections are expected,” an industry source said.
The trend is no different in India, where automobile sales declined by about 6.7% this year, according to FADA.
The broader economic indicators for Gujarat remain strong, with ongoing infrastructure projects and industrial growth supporting long-term demand for passenger vehicles.
A senior RTO officer said, “Sales witnessed a decline due to the general elections. People are expecting some relief in the budget by the new govt and hence we expect July sales to be muted as well. People want to wait and watch before going in for a new vehicle. With the expectation of a normal monsoon and a good kharif crop, we expect sales to pick up again from August or September.”
FADA’s near-term outlook is cautiously optimistic.
“The southwest monsoon has covered the entire country before schedule, boosting the prospects of the kharif sowing. The govt’s increase in minimum support prices (MSPs) for kharif crops is expected to improve disposable incomes in rural India, potentially enhancing auto retail performance.
“While dealers anticipate better sales due to improved supply and new product launches, they express concerns about low customer inquiries and market sentiment dampened by heavy rain,” a statement from FADA said.