The Indian automobile sector is bracing for a challenging June 2025, as dealers express concerns over subdued demand, escalating inventory levels, and potential disruptions in the electric vehicle (EV) supply chain due to rare earth export restrictions.
???? Dealer Sentiment and Sales Outlook
According to the Federation of Automobile Dealers Associations (FADA), only about one-third of auto dealers anticipate growth in June, while 55% expect flat sales. High inventory levels, constrained financing options, and weakening urban consumer sentiment contribute to this cautious outlook.
⚠️ Rare Earth Export Curbs Impact EV Production
China's recent restrictions on rare earth exports pose a significant threat to India's EV manufacturing sector. Major manufacturers like Bajaj Auto and TVS Motor have warned of potential production impacts as early as June or July if the curbs persist. Despite EV sales outpacing gasoline vehicles, they still represent a small portion—2.5%—of total auto sales in India.
????️ Inventory Challenges Across Segments
Vehicle inventories remain well above recommended levels, with car inventory at 52–53 days compared to the advised 21 days. This surplus adds to dealers’ concerns, especially as they navigate the complexities of supply chain disruptions and fluctuating demand.
???? Monsoon's Silver Lining for Rural Sales
A favorable monsoon season may boost tractor and two-wheeler sales in rural areas, offering a glimmer of hope for the industry. However, the overall outlook remains cautious amid global supply chain disruptions and economic uncertainties.