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November automobile retail marginally improves over last year

The number of registrations of vehicles at regional transport offices (RTOs), which is a proxy for retail sales, improved 2% over last year. Registrations improved for all categories of vehicles except commercial vehicles like trucks and buses, the sales of which continue to decline.

, ETBrandEquity|
Dec 11, 2019, 08.15 PM IST
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Registration of passenger vehicles, or cars, improved 1%, as per the data while that of two- and three-wheelers improved 3% and 20%, respectively. Retail for commercial vehicles declined by 8%.
MUMBAI: Retail sales of automobiles registered a marginal growth during the month of November over the same period last year on the back of spill over of demand from the Dussehra and Diwali festive period in October.

The number of registrations of vehicles at regional transport offices (RTOs), which is a proxy for retail sales, improved 2% over last year. Registrations improved for all categories of vehicles except commercial vehicles like trucks and buses, the sales of which continue to decline. The data was sourced from the road transport and highways ministry’s VAHAN platform and collated by the federation of automobile dealers’ associations (FADA), a retailers' lobby body.

“With strong spill over demand post the festive season, the month of November gave extended cheer to the dealer community with retails registering a slight growth year-on-year in all segments except CVs, where demand continues to be quite weak,” said FADA President Ashish Kale. “Agriculture produce now trickling into the markets after the extended monsoon which delayed the crop also contributed to the uptick in the semi urban and rural market.”

Registration of passenger vehicles, or cars, improved 1%, as per the data while that of two- and three-wheelers improved 3% and 20%, respectively. Retail for commercial vehicles declined by 8%.

Another report, this one compiled by the manufacturers’ lobby body Society of Indian Automobile Manufacturers (SIAM), but sourcing data from the same database, found that vehicle registration had increased by 4.8% during November.

A divergence in registration data collated from the same source by the two agencies could raise questions about the veracity of the data and prove to be yet another conundrum for the automobile industry, ET had reported in October. It is also to be noted that the VAHAN platform captures only 1,206 out of the 1,418 RTOs in the country.

While the trends in both the reports were identical this time, the SIAM report suggested that passenger vehicle retail grown was higher at 6.3% as against FADA’s finding of 1%. The divergence in the data for other segments was less stark.

Growth in retail last month was especially encouraging for the industry that has been grappling with declining sales because Diwali, when sales usually peak, was in November last year and the growth this year was on that higher base.

At the end of November, the average inventory with passenger vehicles dealers averaged between 25 and 30 days equivalent – the same as at the end of October. Two-wheeler inventory also remained static at an average between 35 and 40 days. Meanwhile, inventory with commercial vehicles dealers reduced by 5 days to average between 35 and 40 days. The industry norm is to keep inventory equivalent to 30 days of demand; however, dealers are demanding to bring it down to 21 days to reduce their working capital requirements and thus improve profit margins.
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