Auto dealers enter 2015 with subdued optimism

The auto dealers confidence index stood at +7 compared with +14 at the end of previous quarter

Dealers of cars, two-wheelers and commercial vehicles are slightly less optimistic about growth prospects in the new year following a dry festive demand hitting sales.

Dealer development solutions provider Sewells Group today released the results of their fourth Automotive Dealer Confidence Index (ADCI) survey for India for the quarter ended December.

The overall ADCI stood at +7 compared with +14 at the end of previous quarter. Optimism levels across vehicle categories have tempered slightly as compared to the results at the end of the previous quarter.

The Automotive Dealer Confidence Index at the end of Oct-Dec quarter of 2014 is calculated on the basis of the survey conducted in the beginning of January 2015. Responses were received from 172 dealers, across 125 cities, representing 31 different brands.

Passenger car dealers continued to remain optimistic about business prospects in spite of a duller than expected festive period. The index for passenger cars segment stood at +9 at the end of Oct-Dec quarter, as compared to +8 at the end of Jul- Sep quarter.

The index for two-wheeler dealers saw a significant dip in the Oct-Dec 2014 quarter when compared with the Jul-Sep quarter of 2014. The index moved from +35 at the end of Jul-Sep quarter to +10 at the end of Oct-Dec quarter of 2014, indicating a drop in optimism levels of the two-wheeler dealers.

Commercial vehicle dealers, who displayed some signs of revival in the previous survey, seem to continue remaining guarded about business prospects over the next six months. The index stood at -19 at the end of Oct-Dec 2014 quarter as compared to -3 at the end of Jul-Sep 2014 quarter.

Overall, the ADCI at the end of Oct-Dec quarter stands at +7 indicating an optimistic sentiment. However, the fact that it has dropped from +14 at the end of the previous quarter points to a slight tempering of dealer sentiment.

Jayesh Jagasia, CEO of Sewells Group India said: "The formation of a majority Government at the Centre resulted in a spike in optimism across the automotive retail trade earlier in the year, and we are now seeing some of this enthusiasm get tempered by market realities. An impending cut in the interest rates and falling fuel prices are potential drivers of continued optimism at this point. That said, the Sewells Group ADCI at the end of 2014 does indicate that automotive dealers, while positive, are approaching 2015 with a hint of caution".