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Festive October a quirk amid auto slump

Auto sales picked up pace in October as more and more headed out to purchase vehicles amid the festive season. Vehicle registrations at RTOs improved 4% over October last year. Inventory build-up at vehicle dealers eased across the board. Registr...

ET Bureau|
Nov 20, 2019, 07.06 AM IST
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According to experts, sales may taper in the remaining two months of 2019.
MUMBAI: The festive season has bumped up retail sales of automobiles in October during a particularly bad year.

Vehicle registration numbers at regional transport offices, which are a proxy for sales, improved 4% over October last year, as per a report by the Federation of Automobile Dealers Associations (FADA), a retailers’ lobby body. The automobile industry has been in a tailspin for over a year now, with sales falling consistently amid poor consumer sentiment.

“Festivals days saw very good footfall at dealerships across most geographies. Consumer sentiment was positive and purchase decisions were concluded as used to be during the growth years,” said Ashish Kale, president, FADA.

Registration numbers of passenger vehicles (PV) improved 11% in October, while those of two wheelers improved 5%. Commercial vehicles (CV) retail continued to decline, shrinking 23% in registration from the year ago.

Inventory build-up at vehicle dealers eased across board, as manufacturers continued to curtail production. At the end of October, inventory with PV dealers averaged between 25 and 30 days’ equivalent, while that for two-wheeler and CV dealers was at 35-40 days and 40-45 days, respectively. The industry norm is to hold 30 days’ worth of inventory.

However, October was an exceptional month. Sales may taper in the remaining two months of 2019, experts said. December is usually a month of low sales as many customers delay purchase to January to get newer model-year vehicles.

“FADA remains cautious for the near and mid-term post the festive season as BS-VI (emission norms) transition approaches and rural demand is yet to pick up due to extended and excessive monsoon,” the dealers’ body said in a release.

The latest FADA report showed a trend similar to that of a report released last week by the Society of Indian Automobile Manufacturers (SIAM), a manufacturers’ lobby group. Registration numbers in both reports vary by about 4 percentage points with the SIAM report suggesting an overall growth of 7.9% against FADA’s 4%.

Notably, both the agencies source data from the road transport and highways ministry’s VAHAN platform. VAHAN data is prone to changing and often crude, needing further filtering to reflect actual sales, ET had reported last month.

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