Commenting on how February’20 performed, FADA President, Mr. Ashish Harsharaj Kale said, “February turned Positive for Retail Sales for most of the Segment as the Entire Auto EcoSystem, Especially Auto Dealers, Focussed on Liquidation of their BS-IV Stocks. Rural sales contributed to Retail Sales turning Green with Tractors also being in Double-Digit Growth for 2nd month in a row.
Despite YoY Growth, the Overall Retail Sales were much below Expectations as the Expected Pre-buying for the BS-IV stocks was not seen. Many Customers held onto their purchase decision expecting sweeter deals towards End of March.
On the Inventory Front, 2W inventory of BS-IV Vehicles remains a Very Serious Concern for FADA. With the Hon’ble Supreme Court not Considering Our Application for Sale Extension for BS-IV, FADA seriously Urges Our 2W OEM’s to Handhold the Dealers for 100% Liquidation of their BS-IV Stocks. FADA survey reveals a very high number of 2W dealers will not be able to fully liquidate their BS-IV inventory and expressed inadequate support from their OEMs for 100% liquidation of this stock.
With regards to PV and CV Inventory, the Overall Inventory is at a Reasonable Level, but the Challenge Remains in Slow Moving, Non-Popular Models as Dealers look for adequate OEM Support for Liquidation of the Same in the month of March. FADA has Already Advocated for Return of Unsold BS-IV Stocks and will be pursuing this for its members, If the Need Arises, as many Dealers Will be Unable to Sustain such Losses.
Outlook for March
With Banks & NBFC’s getting into a Cautious Mode with Regards to Financing BS-IV Stocks and many RTO’s across the Country prescribing their Own Cut off Dates for Permanent Registration, Retails of 100% of Dealer Inventory of BS-IV Stocks Continues to be a Challenge. Dealers are now Facing a New Challenge with Corona Virus Cases being Detected in India and Alarming Drop in Customer Walk-ins in Auto Showrooms. The Overall Uncertainty of the Situation due to Corona Virus and the Huge Drops in the Share Markets, further Contribute to the Already Weakened Sentiment as Purchase Decisions are getting Postponed.
BS-VI Vehicles Supply is also affected due to the Corona Virus Situation in China and an Already Difficult Transition becomes more Difficult due to Unexpected Happenings all around. Due to all this, the Outlook for the Month of March is Negative.
FADA would Once Again Very Seriously Urge the Government to Look Towards a Relief Package for the Auto Industry with Temporary Reduction in GST till Return of Stability and a Financially Attractive Scrappage Policy, which will not just reduce pollution on Roads of Older Vehicles but will also help in reviving CV Sales which Currently are the Worst Hit.
The Positivity that Revival in Auto Sales Can get, will be Contagious in a Good Way, to Many Other Sectors dependant or Connected to the Auto Eco System and can Trigger the Return to Positivity for the Overall Economy.
Looking at the Current Near Term Situation, FADA will Once Again be Writing to the Hon’ble Prime Minister, Hon’ble Finance Minister and Hon’ble Transport Minister to Consider these Demands for the Auto Industry.”
Key Findings from our Online Members Survey
o 53% Dealers rated it Neutral (54% in January’20)
o 28% Dealers rated it Bad (25% in January’20)
o 20% Dealers rated it as Good (21% in January’20)
o 44% Dealers rated it Neutral (53% in January’20)
o 33% Dealers rated it Good (25% in January’20)
o 23% Dealers rated it as Bad (22% in January’20)
Expectation in March’20
o 43% Dealers rated it De-Growth (80% in case of CV Dealers)
o 32% Dealers rated it Flat
o 25% Dealers rated it Growth
o Average inventory for PVs ranges from 10 12 days
o Average inventory for 2W ranges from 20 25 days
o Average inventory for CV ranges from 10 15 days
Charts showing Vehicle Registration Data for January’20 with YoY comparison can be found below:
Vehicle Registration Data for February’20