The Federation of Automobile Dealers Associations has requested all manufacturers, especially of two-wheelers, to assess the on-ground inventory level and curb production.

Cars lined up for export
Money Automobile sales Tuesday, November 10, 2020 - 10:52

Retail sales of vehicles in India grew marginally by 5.11% sequentially in October, as compared to September. However, it fell by 24% compared to the same month last year, despite October seeing the festive period of Navratri, data from the Federation of Automobile Dealers Associations on Monday (FADA) showed.

FADA said that owing to supply constraints, several dealers of passenger vehicles ended up having limited stock of high selling items and odd variants, which did not attract much demand. This coupled with lower discounts, compared to last year’s festivals also played spoilsport.

“While new launches continued to be in demand in the Passenger Vehicle segment, entry level motorcycles witnessed a lean demand in the 2-Wheeler segment,” FADA President, Vinkesh Gulati said in a statement.

Compared to October last year, two-wheeler registrations reduced by 26.83%, while those of passenger vehicles fell by 8.80%. Three-wheelers saw a whopping 64.5% reduction in sales and registrations.

These numbers come as a sharp contrast to what automobile manufacturers reported earlier this month. For example, Hero MotoCorp said that it sold 7,91,137 vehicles domestically in October, while FADA data shows that only 3,33,563 vehicles were registered. Baja Auto said it sold 5.12 lakh units domestically in October, while FADA data shows registration of only 1,18,486.

Similarly, in terms of passenger vehicles, Maruti Suzuki sold 1,63,656 in October, while FADA shows registrations of 1,24,261. Hyundai, which reported its highest ever domestic sales in October 2020 said it sold 56,605 units, while FADA’s registration numbers came in at 42,757 units.

Similarly, luxury carmaker Mercedes-Benz on Monday said it has delivered over 550 cars to customers during the Navratri and Dussehra period, mainly in Delhi NCR, Mumbai, Gujarat and the northern markets. However, FADA data shows registrations of only 19 cars.

FADA said that however, tractor registrations saw a positive momentum and grew by 55.53%.

While auto sales numbers reported by manufacturers are wholesale dispatches to dealers, FADA’s registration numbers reflect the number of customers who actually bought vehicles from the showroom, and hence get them registered with their Regional Transport Office (RTO).

FADA has said that inventory for two-wheelers and passenger vehicles are at record highs this financial year and has requested all manufacturers, especially two-wheeler makers, to assess the on-ground inventory level and curb production accordingly.

“FADA once again cautions both OEMs and dealers to keep a check on vehicle inventory as post festivals, demand may remain subdued. Since inventory levels are at its highest during this financial year, it may impact dealers financial health thus leading to closures and job losses,” FADA added.

However, it is pertinent to note that FADA data doesn’t include figures from Andhra Pradesh, Telangana and Madhya Pradesh. Vehicle Registration Data has been collated as on November 8 from 1,257 out of 1,464 RTOs across the country.

“October continues to see positive momentum on a monthly basis but on a yearly basis the negative slide continues to increase. The 9 days Navratri period witnessed robust vehicle registrations but could not save October to go in red as compared to last year when both Navratri and Diwali were in the same month,” Vinkesh added.

Further, based on a survey of automobile dealers, FADA says that 37% of dealers expect flat growth in November, while nearly 30% expect there to be a de-growth. With the last leg of the festive season approaching, FADA says that there is a sense of cautiousness amongst customers.

“Due to the lockdown announced in few European Countries, procurement of spares will also be a cause of hindrance for smooth supply of vehicles in Indian markets. This will create a supply and demand mismatch thus affecting the passenger vehicle sales,” it said in a statement. 

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