Retail CV sales remain in the slow lane

There is some recovery in retail sales and inventory revels coming down sizably, yet the overalls truck sales still down double-digits. This decline points out that the complete revival of the truck industry is still some time away.

The overall retail sale of commercial vehicles remains weak in October. However, the inventory has declined sharply. The Federation of Automobile Dealers Associations (FADA) today released the monthly vehicle registration data for October’19. This month’s overall vehicle registrations finally show positive momentum with the most significant festivals of Navratri/Dussehra and Diwali being in the same month. Vehicle makers have offered attractive schemes, which boosted the overall positive mood of the buyers. October 2019 month has registered a total retail, commercial vehicle sale of 67,060 units against 87,618 units YoY, down 23% while other vehicles segment positive sales in the month. A total of 59,573 units of three-wheelers retailed in the month, up 4% YoY.  CV inventory has also reduced although with retail continuing to be weak, where further wholesale regulation is required to reach FADA’s 21 days recommended levels. At present, the average inventory for CV ranges from 40 – 45 days (50-55 days in September’19).

According to FADA, as the industry is heading into the unknown territory of BS-VI transition, more needs to be done towards inventory reduction to avoid dealer losses. October retail was in the positive, giving a much-needed respite to the auto industry and especially the dealer community after months of de-growth. The festivals saw very good footfalls at dealerships across most of the geographies and the consumer sentiment was positive, and purchase decisions were concluded as used to be during the growth years.

Strong support from banks & NBFC’s helped convert the festive mood of the consumer into retails. With continued liquidity easing, the business appetite of banks & NBFC’s has grown and will surely aid the industry in the path to recovery as the consumer sentiment strengthens in the coming days. FADA has requested banks and NBFC’s to provide more support for a stronger recovery. As the full effect of the positive measures taken by the government plays out and banks and NBFC’s aggression continuing post the festive season, strengthening of demand is likely to bottom out of the de-growth.

With a new normal now being set, FADA expects the near term to be stable and consumer sentiment changing for the positive as the economy heads towards recovery with the government's strong focus and actions towards it. FADA continues its recommendation to its members to tread with caution, especially with regards to inventory and Costs during this dynamic time of fluctuating consumer Sentiment due to overall weak economic situation and BS-VI transition. FADA will also continue to engage with all the stakeholders for a smooth development into the BS-VI Regime for its members.