The ongoing rare earth magnet crisis, geopolitical tensions, and US tariffs are likely to hit domestic automobile sales, the Federation of Automobile Dealers Association (FADA) warned in a note on Monday.
“Evolving geopolitical tensions and potential spill-over from US tariff measures warrant vigilant supply chain management and could temper consumer sentiment. Also, challenges in securing rare-earth materials have stalled component production, further constraining supply and retail volumes,” says C Vigneshwar, President, FADA.
The development comes at a time when the retail sales for the domestic automobile market have surged marginally by 4.85% year-on-year in the April to June quarter of FY26. Of this, two-wheeler retail sales were up 5.02% YoY, three-wheeler sales were up 11.79% YoY, tractor sales were up 6.29% YoY, passenger vehicle sales were up 2.59% and commercial vehicle sales were up 1% YoY.
“While 2W showed some early-cycle softness, we remain confident of a robust ramp-up in the coming months as seasonal demand and targeted OEM initiatives take effect,” says C Vigneshwar.
In June, the domestic retail sales were up by 4.84% year-on-year to 20,03,873 units, as against 19.11,354 units in the same period last year. The two-wheeler sales were up by 4.73% during the month under review to 14,46,387 units, as against 13,81,040 units in the same period last year. The three-wheeler sales were up 6.68% YoY to 1,00,625 units as against 94,326 units. The passenger vehicle sales were up by 2.45% to 2,97,722 as against 2,90,593 units in the same period last year. The commercial vehicle sales were up 6.6% to 73,367 units, as against 68,825 units in the same period last year.
For the near term, FADA expects above-normal monsoon to bolster rural demand even as heavy-to-very-heavy precipitation zones introduce logistical complexities. “Early Kharif sowing, up 11.3% YoY to 262.15 lakh hectares, underlines stronger farm incomes and augurs well for two-wheeler uptake in the hinterlands. Simultaneously, robust government capital expenditure through June–August—targeting roads, railways, metros, and green-energy projects—will underpin CV and CE (construction equipment) segments,” says FADA.
