On Monday, India's Federation of Automobile Dealers Association (FADA) said consumer sentiment can be dampened by geopolitical tensions and US tariffs. It can heavily impact the car supply. Rare earth curbs may limit car supply and retail volumes.
FADA added that monsoons that are above normal should bolster rural demand in the near term.
In June, retail volumes slipped 9.4%. Above the FADA's recommended threshold of 21 days, the average time a car stayed in a showroom, or inventory days, rose to about 55 days from 52-53 days in May.
Amid uncertainty over US President Donald Trump's tariffs, China's rare earth export curbs have upended global auto supply chains, and hence, the challenges of Indian carmakers have skyrocketed. Indian carmakers are already dealing with high inventories and tighter financing.
"As we enter July 2025, dealer sentiment appears tilted towards (a) slowdown - flat and de-growth expectations (42.8% and 26.1%) exceed growth forecasts (31.1%). Similarly, booking-pipeline traction remains uneven," FADA said.
FADA said that above-normal monsoon showers must bolster rural demand in the near term. They also added that July will be driven by agrarian tailwind, tempered by seasonal headwinds, price points that are elevated and will see mixed fortunes.
In June, FADA issued a warning that the demand may remain subdued, with reduced financing, concerns about rare earth shortages and elevated inventory levels.
The bio of the FADA's website reads, "Founded in 1964, Federation of Automobile Dealers Associations (FADA), is the apex national body of Automobile Retail Industry in India engaged in the sale, service and spares of 2 & 3 Wheelers, Passenger Cars, UVs, Commercial Vehicles (including buses and trucks) and Tractors.
FADA India represents over 15,000 Automobile Dealerships having over 30,000 dealership outlets, including multiple Associations of Automobile Dealers at the Regional, State and City levels, representing the entire Auto Retail Industry. Together, we employ ~5 million people at dealerships and service centres.
FADA India, at the same time also actively networks with the Industries and the authorities, both at the Central & State levels to provide its inputs and suggestions on the Auto Policy, Taxation, Vehicle Registration Procedure, Road Safety and Clean Environment, etc. to sustain the growth of the Automobile Retail Trade in India."
