As per data provided by FADA (Federation of Automobile Dealers Associations), auto registrations in September 2019 have reached a new low. Passenger vehicles (PVs) are the worst hit, with vehicle registrations down by -20.1%.
The start of the festive season and positive measures taken by the government appear to have limited effect on boosting car sales. However, FADA is hopeful that things will improve from October onwards.
Key reasons cited by FADA for the lacklustre performance include excess rainfall across various regions and ‘Shraddh’ period in September. Things could improve during Diwali and thereafter, with factors such as easing liquidity situation and monsoon withdrawal with surplus rainfall. Impact of government decisions should also start showing results in the coming months. Corporate tax rate cut and the subsequent stock market boom are among the factors that can boost consumer sentiment in October and beyond.
Average inventory for PVs in September increased to 30–35 days, which is slightly more than 25-30 days in August. Expectation of higher car sales during festive season has led to this increase in average inventory. As per FADA recommendations, average inventory for PVs should be 21 days.
In September 2019, total car sales in the country stood at 1,57,972 units. This translates into YoY loss of -20.08%. Car sales in the same period last year stood at 1,97,653 units. In September, top 10 contributors in car sales were Maharashtra (19,405 units), Uttar Pradesh (16,192), Karnataka (14,326), Gujarat (14,193), Tamil Nadu (14,074), Haryana (10,781), Delhi (9,673), West Bengal (8,572), Rajasthan (8,131), and Punjab (7,064).
Among the top 10 contributors, only West Bengal has registered positive YoY growth of 13.42%. Other states in the list with positive YoY growth include Assam (17.13%), Bihar (29.33%), Odisha (0.07%), Chhattisgarh (22.94%), Meghalaya (9.60%), Sikkim (60.52%), Manipur (35.38%), Arunachal Pradesh (26.82%), Mizoram (39.56%), Tripura (1.80%) and D & N (2.34%).
As car sales continue to be slow, FADA has urged carmakers to be realistic with their assessment of retail conditions. FADA said that wholesale billing need to be adjusted accordingly, so that the problem of high inventory situation can be avoided. FADA also mentioned that things appear to be improving at dealer level, which could bring stability to auto retails in the coming months.