High festive-season discounts bring much-needed respite to auto dealers

Retail sales of passenger vehicles - largest component of the pie - jumped 11% in Oct

Retail sales of vehicles saw an uptick in October on the back of attractive festive season offers, according to automobile dealers.

Retail sales of passenger vehicles — the largest component of the pie — jumped 11 per cent year-on-year in October to 248,036 units, largely because of discounts offered during Navratri and Diwali, according to the data from the Federation of Automobile Dealers Associations (FADA) of India on Tuesday. 

FADA on Tuesday said overall vehicle registrations grew by 4 per cent to 1,709,610 units in October, compared to 1,638,832 in the same period last year. 

However, with dip in economic activity and overcapacity with fleet owners because of an increase in freight-carrying capacity of trucks, sales of heavy commercial vehicles slumped 23 per cent to 67,060 units during the month.

“October retail sales were in the positive, giving the much-needed respite to the auto industry and especially the dealer community after months of degrowth,” said Ashish Harsharaj Kale, president, FADA.

This year, Diwali and Dussehra festivals were in October and the auto industry, reeling from a severe sales slowdown that began sometime last year, had announced deep discounts and other incentives to push inventories. 

Kale said dealerships across many parts of the country saw high footfall. “The consumer sentiment was positive, and purchase decisions were concluded as (they) used to be during the growth years,” he added.

Kale praised the actions taken by automakers to cut down inventories, which had been at alarming levels for some time. “Although not at FADA-recommended levels of 21 days, two-wheeler inventory has reduced from an alarming level. Passenger vehicle inventory, already at reasonable levels, has reduced further,” he said.

The lobby group said that with continued liquidity easing, business appetite of banks and non-banking financial companies (NBFCs) has grown and will aid the industry in the path to recovery as consumer sentiment strengthens in the coming days. “Both banks and NBFCs are requested to provide more support for a stronger recovery,” it said in a statement.

In the near term, the association expects the industry to be stable and consumer sentiment to turn positive, though it advises its members to be on guard. “FADA continues its recommendation to its members to tread with caution, especially with regard to inventory and costs during this dynamic time of fluctuating consumer sentiment due to overall weak economic situation and Bharat Stage VI transition,” said Kale.

According to an online survey of its members on their expectations for November, 48 per cent dealers expect sales to be flat, 33 per cent dealers, degrowth, and 19 per cent dealers, growth.