Passenger vehicle retail sales rise 27.6 percent in October 2020

Passenger vehicle retail sales rise 27.6 percent in October 2020

Passenger vehicle retail sales in India witnessed substantial month-on-month growth in October. In its report for October, the Federation of Automobile Dealers Associations (FADA) pegged new passenger vehicle (PV) registrations at 2,49,860 units, which is a 27.6 percent growth on the 1,95,665 units registered in the month of September. Compared to October last year, PV retail sales were down 8.8 percent in October 2020. It’s important to note that the sales figures released by vehicle manufacturers earlier in the month represent what was sold to dealers, while these figures issued by FADA represent the actual number of vehicles sold to customers , which paints a more accurate picture of customer demand.

·        PV retails down 8.8% compared to October 2019

·        Two-wheeler retails remain sluggish

·        FADA cautions against inventory build-up

Festive season spurs demand for new vehicles in October 2020

Overall automotive retails in October 2020 – including PVs, two-wheelers, three-wheelers, commercial vehicles and tractors – were pegged at 14,13,549 units, a 5.1 percent growth over September, but a 24 percent drop compared to October 2019, which had a larger base on account of two big festivals – Navratri and Diwali – being part of the same month.

Most vehicle manufacturers reported a rise in dispatches to dealers in the month of October, with Tata Motors and Kia Motors India reporting staggering year-on-year growth, and Hyundai, MG Motor India and Hero MotoCorp registering their highest sales figures yet.

Commenting on vehicle retails in October 2020, FADA president Vinkesh Gulati said, “October continues to see positive momentum on monthly basis but on a yearly basis the negative slide continues to increase. The nine-day Navratri period witnessed robust vehicle registrations but could not save October from going into the red as compared to last year, when both Navratri and Diwali were in the same month.”

Two-wheeler sales (10,41,682 units) witnessed a marginal 2.4 percent month-on-month growth but dipped by a significant 26.8 percent compared to the same period last year, with FADA stating demand for entry-level motorcycles remains “lean” even with the onset of the festive season.

FADA’s report also states that most PV dealers ended up with limited stock of high-selling models and odd variants, which did not attract much demand, due to a “supply-side mismatch”. Lower discounts compared to 2019 also prevented retails from matching last year’s figures, according to FADA.

FADA advises caution to manufacturers, dealers

With dispatches from manufacturers to dealers soaring and sales showing improvement but still unable to match 2019’s numbers, FADA has advised vehicle manufacturers and dealers to exercise caution. The dealer body notes further interruptions caused by the COVID-19 pandemic in certain European countries could cause issues with procurement of spares, which could impact supply of vehicles and affect PV sales.

Urging the government to introduce an incentive-based scrappage scheme at the earliest, FADA says demand may remain subdued once the festive season ends, and that it’s pertinent to keep a check on inventory levels, as they may impact dealers’ financial health and result in further closures and job losses.

Currently, FADA estimates dealers have an average passenger vehicle inventory ranging from 35 to 40 days, and an even higher two-wheeler inventory ranging from 50 to 55 days.

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