December's auto sales back in red

While commercial vehicle (CV) sales were the worst hit, down by 21 per cent to 67,793 units from 85,833 units, two-wheeler sales dropped by 16 per cent to 12,64,169 units from 15,00,545 units. Passenger car sales dropped nine per cent to 215,716 units from 236,586 units.

Retail sales of automobiles in the country dropped by nearly 15 per cent to 16,06,002 units in December 2019, the highest decline in the current financial year.

Earlier this month, the Society of Indian Automobile Manufacturers (SIAM), which monitors wholesale data, showed that total vehicle sales across categories registered a decline of 13.08 per cent to 14,05,776 units from 16,17,398 units in December 2018.

Federation of Automobile Dealers Associations (FADA) data shows that total vehicle registrations dropped to 16,06,002 units in December 2019 from 18,80,995 units a year ago.

While commercial vehicle (CV) sales were the worst hit, down by 21 per cent to 67,793 units from 85,833 units, two-wheeler sales dropped by 16 per cent to 12,64,169 units from 15,00,545 units.

Passenger car sales dropped nine per cent to 2,15,716 units from 2,36,586 units.

FADA president Ashish Harsharaj Kale said December sales de-growth was not on expected lines as enquiry levels all through the month were quite robust.

Consumer sentiment continues to be very weak as customers did not conclude their purchase even after enquiring and despite the best offers being available.

The federation expressed concern on falling auto sales and shifted its stance to ‘very cautious’ for near and mid term as the industry moves towards BS-VI transition.

“The sharp decline in growth has denied the dealer community an opportunity to reduce BS-IV inventory, making the transition to BS-VI trickier.

"With such a weak consumer sentiment, FADA recommends a very cautious approach to its members with serious focus on BS-IV inventory liquidation,” said Kale.

FADA, which represents the dealer community, said it will work towards seeking relief from the Supreme Court on BS-IV inventory with its members.

With such weak consumer demand, near-term retail sales are unpredictable.

This makes it extremely difficult for FADA’s members to continue the current business and ensure selling entire BS-IV inventory by March 31.

Speaking about the inventory, Kale said, although there was a slight reduction across all segments, CV and two-wheeler inventory still remains a concern, especially looking at the transition and the current weakness in demand.

Passenger vehicles for the first time is in the FADA recommended range of three weeks.

FADA said that liquidity still remains a concern for the dealer community as well as for the retail customer as banking and finance industry continues to be in cautious mode.

Along with government measures aimed at increasing demand, equal importance needs to be given to availability of reasonably liberal credit.

This is especially true in a developing country like India where growth is driven by first-time buyers or individuals and businesses, he said.

FADA’s survey showed 43 per cent of its members expect January to be flat while 28 per cent dealers rated it de-growth.

The remaining feel that the month may see some growth.

Photograph: Reuters