Vehicle registration data released by Federation of Automobile Dealers Associations (FADA) for the month of January 2020 shows that car sales continue to witness de-growth.
While a slight uptick was witnessed in October last year on account of festive season, sales numbers are again showing a decline. In January 2020, only three of the top 10 contributing states witnessed positive growth. Overall, only 14 states out of 32 registered positive growth. Even among states with significant positive growth, many do not have substantial sales numbers.
In January 2020, Maharashtra recorded highest car sales among all states. However, YoY growth is negative at -1.84%. A total of 37,965 cars were sold in January 2020, as compared to 38,678 units sold in same period last year. At number two is Uttar Pradesh with sales of 32,788 units, which translates into YoY growth of 2.75%. Karnataka takes the third place with 25,773 units sold, registering a decline of -1.75%. The other two states in top 10 contributors with positive growth are Haryana (5.09%) and Delhi (3.08%).
Other states featured in top 10 include Gujarat (-7.84%), Tamil Nadu (-3.57%), Kerala (-17.21%), Rajasthan (-3.26%), and Punjab (-9.24%). Overall, a total of 2,91,879 cars were sold in January 2020, which translates into -4.28% de-growth in comparison to January 2019 when sales were 3,04,929 units.
According to FADA, there are several factors affecting sales in auto sector. One of these is the transition to BS6, which is prompting people to delay their purchase decision. While several carmakers have updated their portfolio to BS6, customers are still wary and not sure which option would be best for them. Both BS4 and BS6 variants are currently on sale, which is why many customers are unable to take a final decision.
FADA also said that 2020 budget did not have anything substantial for auto sector, even though it is an inclusive budget that aims to boost growth in the mid to long term. The budget did not provide any immediate incentive to the auto sector. However, there’s some relief for car dealerships, as inventory levels have come down to 15 – 20 days in January 2020. This is within the FADA prescribed inventory level of 21 days. In December 2019, inventory level of PVs was in the range of 20-25 days.
In view of Supreme Court’s refusal to grant extension for sale of BS4 vehicles beyond March 31, FADA said that it is working with all stakeholders to liquidate BS4 stock before the stipulated deadline. Towards that end, FADA is working with banks and NBFCs to provide easy finance option to people interested in buying BS4 cars. FADA has also requested OEMs to bill BS4 vehicles directly against customer orders and make it on a returnable basis so that none of its members has to suffer financial loss.