Vehicle registration data released by the Federation of Automobile Dealers Associations (FADA) shows that car sales are down -1.17% in February 2020
A total of 2,26,271 units were sold in February 2020, as against 2,28,959 units in February last year. In state-wise sales, Uttar Pradesh leads the pack with sales of 28,136 units in February 2020. This translates into YoY gain of 3.66%, as against 27,143 units sold in February 2019. At number two and three are Maharashtra (21,838) and Gujarat (20,413), both of which have registered negative YoY growth in February.
Among the top ten contributing states, only UP, Haryana (11.90%) and Punjab (2.14%) have registered positive YoY growth. States with negative growth include Karnataka (-0.62%), Tamil Nadu (-5.23%), Rajasthan (-7.46%), Kerala (-19.37%), and Delhi (-7.06%).
In its report, FADA has pointed to several factors that are working against the PV segment. One of FADA’s primary concerns is the slow movement of BS4 cars, especially non-popular models that are stocked with dealerships. As there is limited demand for these cars, dealers are worried that these will remain unsold when BS6 norms kick in from April 1.
State-wise Car Sales Feb 2020
|12||J & K||6,735||4,351||2,384||54.79|
|30||D & D||113||422||-309||-73.22|
Although average inventory of PVs was quite good at 10-12 days in February, the unsold BS4 stock poses a big challenge for dealerships. There aren’t many choices for dealerships, as the Supreme Court has already rejected the application to extend the deadline for sale of BS4 vehicles.
FADA said that it is working with all stakeholders to ensure 100% liquidation of BS4 inventory. The association has advocated that dealers should be allowed to return unsold stock of BS4 cars. FADA will take up the matter with OEMs, as most dealers have said that they won’t be able to bear such losses.
Other problems affecting car sales include the cautious approach being taken by banks and NBFCs in providing finance options to customers. Many RTOs have announced their own cut-off dates for permanent registration, which is also creating confusion among customers. The newest challenge for dealerships and the entire auto industry is the Coronavirus pandemic, which is adversely affecting consumer sentiments and supply chain. Share markets across the globe are collapsing due to uncertainties related to coronavirus, something that will further increase problems for auto sector.
FADA said that it will again request the government to launch a relief package for auto industry. Things like reduction in GST and financially attractive scrappage policy are among the key demands made by FADA. The association believes that reviving the auto sector can in turn kick-start the economy, as a number of other industries are linked to auto industry. In view of the old and new challenges, FADA said that the outlook for March remains negative.