Auto sales fall 4.3% in July, hurt by Trump tariffs, IT job cuts, rains

Two-wheeler sales contract 6.5% as Indian auto industry 'applies the brakes': Fada

Automobile retail sales in July fell 4.3 per cent from the previous year as uncertainty about US tariffs’ impact, job cuts in the IT sector, and heavy rains weighed on consumers, said a dealers’ association on Thursday.

 

Two-wheeler sales contracted 6.5 per cent and passenger vehicle fell almost 1 per cent, according to data shared by the Federation of Automobile Dealers Associations (Fada). The group said concern that manufacturing jobs could be affected by President Donald Trump’s tariffs may have affected consumer sentiment as well. “We really don’t know how much Donald Trump tariffs are going to affect the industry in terms of sentiment,” said C S Vigneshwar, Fada’s president. As many as 1.96 million automobiles were sold in July and 2.05 million in the same month last year.

  

Retail sales contracted after three consecutive months of growth. “India’s auto retail sector applied the brakes in July, with overall retails [sales] declining by 4.31 per cent year on year. This pullback largely stems from a high-base effect in July 2024, when an extreme heat wave was immediately followed by excessive rainfall, constraining volumes before a rebound later that month,” said Vigneshwar.

 

Sales of construction equipment, which Fada considers as a separate, standalone category, “de-grew” 33.3 per cent in July after strong growth in the previous two months. “A lot of customers pre-purchased in this segment due to new emission norms. This will settle going forward,” he said. Three-wheeler sales in July grew 0.83 per cent from the previous year.

 

Two-wheeler sales declined 6.48 per cent to 1.36 million, as crop sowing and heavy rains dampened rural sentiment. “Dealers are confident of a post-monsoon uptick, with several purchase decisions deferred to August ahead of the festive season — making strategic stock alignment and focused rural–urban engagement imperative for reviving momentum.” 

Passenger vehicle sales contracted 0.81 per cent in July even as volumes surged 10.38 per cent on a monthly basis. Targeted schemes by automakers, new models, and aggressive rural marketing powered hinterland sales, which picked up towards month-end. “Urban demand, however, remained muted due to low enquiry and restrained customer sentiment. With inventory levels steady at around 55 days, calibrated discounting, streamlined finance facilitation, and intensified urban outreach will be crucial for sustaining festive-season growth.”

 

Commercial vehicle sales grew 0.23 per cent, helped by urban demand. Dealers cited new-model launches, aggressive marketing support, bulk institutional orders, and timely stock availability as key drivers, alongside targeted schemes that bolstered school-bus volumes. In contrast, rural haulage demand remained fragmented amid heavy rainfall, seasonal softness in cement, coal, and construction logistics, and slower financier disbursements, prompting many buyers to defer purchases to the post-monsoon period. 

 

Tractor sales increased 10.96 per cent in July. “The timely release of enhanced agricultural subsidies and favourable monsoon rains — together with strengthened rural liquidity — spurred a marked increase in purchase intent. This resilience underscores the pivotal role of policy interventions in sustaining agri-rural demand,” said Vigneshwar.