FADA believe that the worst for auto industry is now behind us

FADA appreciates bold steps taken by majority OEM's leading to easing of dealer inventory

The Federation of Automobile Dealers Associations (FADA) has released the Monthly Vehicle Registration Data for the month of March 2019. The two-wheelers (2W) registration were up by +10% mom and down 7% yoy to 13.25 lakh, while passenger vehicles (PV) registration increased 5% mom and declined 10% yoy to 2.43 lakh in March 2019. The commercial vehicle registration rose 2% mom and fell 12% yoy to 0.62 lakh, while three wheeler registration moved up 3% and eased 6% yoy to 0.53 lakh in March 2019.

For the month of March 2019, on a Year on Year basis, there was de-growth in all the categories as March 2018 was one of the biggest months for Retails last fiscal. The Industry showed positive signs on a monthly basis as compared to February 2019

Commenting on the yearly and monthly performance, FADA President, Ashish Harsharaj Kale said, I am happy to share that at the retail front, the Indian auto sector has managed to close FY19 on a positive note. All the segment echoed positivity in March when compared to February sales, with 2W leading the charge with a healthy growth of 10% which indicated slight improvement in consumer sentiment and liquidity availability.

Inventory reduction by way of Production cut is a painful decision for all stake holders, especially OEM's and that too in a growing market like India. FADA appreciated the bold steps taken by majority of OEMs for regulating production to current demand and helping dealers in reducing inventory.

The inventory reduction in March, with further reduction expected in April, will help get the Dealers to normal inventory levels of 30 days and will form a good base in the new financial year with renewed expectation and positivity.

For the Month of March, Liquidity, both for the Consumer and the Dealer, remained very tight and Operating Cost of Auto Dealerships were at its Peak, owing to Higher Inventory and Selling Costs. RBI has already initiated measures which will result in Easing of Consumer Liquidity and FADA expect the easing to continue in the coming months.

The dealer community has faced one of the toughest times in dealer liquidity and adequate working capital availability in the past 6 months and in few cases, even threatening the survival of their business. FADA aims to engage with the newly elected policy makers of nation, post the elections and will be advocating a separate working capital policy for auto retail, which will aid in its continued sustainable growth.

Auto retail is one of the highest employment providers to the urban as well as rural economy, providing 25 lakh direct jobs and an equal number of indirect jobs.

Near Term Outlook

Commenting further FADA President said, FADA believe that the worst for auto industry is now behind us and expect plateauing of the declining demand and expect sales to stabilize in their current normal range for the next 4-6 weeks till India's biggest democratic festival, the elections, conclude and we head towards the onset of the monsoon."

"A stable government at the centre, an above average or average monsoon and most importantly a continued easing monetary policy by the RBI, which has been initiated by the new RBI governor, resulting in liquidity availability, are factors which will once again begin the positive run of Indian auto retails and we expect that to continue into the festive season."

Powered by Capital Market - Live News