Automotive plants in India might face shutdowns by the end of June due to China’s export restrictions on rare earth magnets, according to the President of the Federation of Automobile Dealers Associations (FADA), CS Vigneshwar.
“If we don’t get the supplies straightened out, plants might get into shutdowns by the end of June…Our government needs to probably liaise with them and sort things out….So at the moment, I urge the customers to get into dealerships and buy them,” he said during a conversation with NDTV Profit on Friday.
Regarding the source for the information on potential plant shutdowns, he said, “Both SIAM (Society of Indian Automobile Manufacturers) and ACMA (Automotive Component Manufacturers Association of India) have talked about…it’s in the public domain.”
The president of the apex industry body for automobile dealers also talked about consumer demand in the near term. The early onset of the monsoon, with rainfall at 106% of expected levels, is likely to bolster rural demand. A 3% hike in the minimum support price for kharif crops will further support rural demand, he suggested.
However, the FADA president cautioned that uneven rainfall distribution could temper this optimism in some regions. He also outlined that urban demand continues to be under pressure.
“The urban demand is facing a little bit of headwinds because the cost of living hasn’t gone down drastically and salaries have not kept pace with the increasing cost of the car. And we’re also seeing some kind of tightening from the banks. They still haven’t loosened their purse strings,” he said.
He suggested that the government can engage with financial institutions to ease lending conditions and stimulate demand. Despite these challenges, customer walk-ins at dealerships remain “quite strong.”
According to FADA’s data in May, the two-wheeler segment grew by 7.31% year-on-year (YoY), while the three-wheeler segment rose 6.28% YoY. Passenger vehicle sales fell 3.11% YoY, while the commercial vehicle segment saw a decline of 3.71% YoY.
Vigneshwar highlighted several headwinds affecting performance, including the impact of India-Pakistan border tensions, which dampened sales in states like Gujarat, Jammu and Kashmir, Rajasthan, and Punjab during the first half of May.
“The first 10 to 12 days there was hardly anything at all selling,” he noted, though he confirmed that customers had since started to return to showrooms.
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