FADA reports a drop of 21 % in December retail CV sales

According to the dealer’s association, after 2 months of positive sales during the festival time of October and its spillover effect in November, auto retail sales fell once again in December. Despite robust inquiries and with offers and discounts at its peak, customers did not conclude on their purchase as expected, showing continued weakness in consumer sentiment.

The Federation of Automobile Dealers Associations (FADA) while releasing its monthly vehicle registration data for December’19, recorded a 15 % negative growth in the overall vehicle registration, while the two-wheelers and passenger car declined by 16 and 9 percent respectively. The commercial vehicle segment de-grew by 21%. The three-wheeler segment is the only exception to this decline which registered one percent growth.

FADA says the fall in overall auto sales in December is the highest in the fiscal year, it shares its concern on such a sustain declined in sales and shift its stance to very cautious for the near and mid-term as the industry is now almost reaching to the BS-VI emission regime.

Commenting on the December sales numbers, the FADA president, Ashish Harsharaj Kale, said, “ December sales de-growth was not on expected lines as the inquiry levels all through the month were quite robust. The consumer sentiment remains weak as customers did not conclude on the purchase even after taking the efforts of inquiring and despite the best offers being available. The sharp decline in growth has denied the dealer community an opportunity to reduce its BSIV inventory, making the transition to BSVI trickier.”

FADA will work towards seeking relief from the Supreme Court for the BSIV inventory of its members as with such weak consumer demand, the near-term retail sales are unpredictable, making it extremely difficult for our members to Continue the Current Business and also ensure a Nil BS-4 inventory on the 31st of March. On the inventory front, although there was a slight reduction across all segments, the CV and 2W inventory remains a concern, especially looking at the transition and the current weakness in demand.

According to FADA, liquidity still remains a concern for the Dealer Community as well as for the retail customer as the banking and finance industry continues to be incautious.

Key Findings from FADA Online Members Survey

Sentiments

o 54% Dealers rated it Neutral (49% in November’19)

o 25% Dealers rated it Bad (38% in November’19)

o 20% Dealers rated it as Good (13% in November’19)

 Liquidity

o 50% Dealers rated it Neutral (53% in November’19)

o 25% Dealers rated it Bad (30% in November’19)

o 25% Dealers rated it as Good (18% in November’19)

 Expectation in January

o 43% Dealers rated it Flat

o 28% Dealers rated it De-Growth

o 28% Dealers rated it Growth

Inventory

o Average inventory for PVs ranges from 20 – 25 days (25 – 30 days in November’19)

o Average inventory for 2W ranges from 30 – 35 days (35 – 40 days in November’19)

o Average inventory for CV ranges from 30 – 35 days (35 – 40 days in November’19)