As per monthly vehicle registration data for January 2020 released by the Federation of Automobile Dealers Associations (FADA), two-wheeler sales continue to witness negative growth.
It may be recalled that the auto sector has been reeling under slowdown since the last 14 months. The only exception was the month of October when sales had turned buoyant on account of festive rush. After that, two-wheeler sales have continued to witness de-growth.
According to FADA, one of the reasons for de-growth is the delayed purchase decision by customers. The on-going transition from BS4 to BS6 is creating confusion in the minds of customers, which is adversely affecting two-wheeler sales. Even though many models have been updated to BS6, customers are unable to decide whether to go for cheaper BS4 variants or the updated but costlier BS6. This scenario has prompted many customers to postpone their plans to buy a two-wheeler.
State wise vehicle registration data indicates that eight out of the top ten contributing states have witnessed negative growth in January 2020. The only two states in top 10 with positive growth are Uttar Pradesh and Bihar. While UP recorded sales of 2,41,542 units in January, a total of 69,570 units were sold in Bihar. This translates into positive growth of 20.23% and 20.07%, respectively. The eight states in top ten with negative growth in January are Maharashtra (-5.91%), Tamil Nadu (-9.30%), Karnataka (-10.18%), Gujarat (-16.95%), Rajasthan (-14.27%), West Bengal (-41.24%), Odisha (-2.15%), and Kerala (-23.07%).
High growth in sales was recorded in states like Sikkim (95.10%) and Chandigarh (85.79%). However, actual sales numbers are not substantial in these states. So, these do not have any major impact on overall two-wheeler sales in the country. Overall, 12,67,366 units were sold, registering de-growth of -8.82%, as against 13,89,951 units sold in same period last year.
Commenting about the current state of auto industry, FADA said that this year’s budget has not provided any major benefits that can revive growth in the sector. However, FADA appreciated the fact that the budget has made some good announcements that can boost growth in the medium to long term.
A good thing for two-wheeler dealerships is that average inventory level for two-wheelers has come down to 25-30 days in January 2020. This is quite close to the targeted range of 21 days, as prescribed by FADA. In December 2019, average inventory was 30-35 days.
FADA said that it is working with all stakeholders to enable a smooth transition to BS6. FADA has teamed up with banks and NBFCs to provide attractive finance options to customers who may be planning to buy the cheaper BS4 models. FADA has also appealed to the government to take favourable decisions to boost growth and revive the auto sector.