India’s Car Sales to Dealers Decline for Second Consecutive Month in August

India’s car sales to dealers have reportedly declined for the second consecutive month in August, according to analysts. The anticipated 3% drop in sales is attributed to car manufacturers scaling back production to manage high dealer inventories. This decrease follows a 2.5% fall in July, marking the first drop in over two years.

Nomura has projected a 3% reduction in August sales, while market leader Maruti Suzuki is expected to experience a 6% decrease in domestic sales, as indicated by Jefferies and Motilal Oswal. Nomura’s forecast aligns closely, predicting a 5.5% drop in Maruti Suzuki’s sales. This follows a 5.5% decline in July.

Similarly, Mahindra & Mahindra’s SUV sales growth has reportedly slowed to 13% from 15% in July. Tata Motors is also experiencing a slowdown, with domestic car sales potentially falling 4% compared to a 6% drop in July. 

Retail sales have been particularly weak, likely decreasing by 6%-8% as customers are postponing purchases in anticipation of better deals during the festive season in September, according to Motilal Oswal.

The ongoing weak sales are expected to impact auto stocks, which are poised for their first monthly decline in ten months. The auto sector, which holds a significant weightage in the broader market index, is facing pressure as manufacturers navigate the current sales slowdown and adjust production strategies.

As the industry adapts to these challenges, stakeholders will be closely watching the impact on stock performance and future sales trends.