You are here: Home » Companies » News
Business Standard

Rising sales numbers not a reflection of ground reality, say auto dealers

Dealers say that with more job cuts and salary reduction, banks and NBFCs have become more cautious

Topics
Auto sales | Auto dealers | BS VI

Arindam Majumder  |  New Delhi 

automobile, auto sales, car, equipment, manufacturing, component, production, jobs, workers
Auto sales numbers are a barometer of the country’s economy.

Wholesale automobile sales for most in India may have risen significantly in August, but dealers say they are yet to see signs of recovery in retail demand.

Dealers say the significant increase in sales was also driven by a need to plug the diminishing inventory as most dealerships were transitioning from Bharat Stage (BS)-IV to BS-VI when the Covid-19 lockdown was announced.

“Auto are seeing through rose-tinted glasses. Obviously there is stock build-up happening. For some companies, it is overstocking, leading to an inventory pile-up. For others, it’s regularisation of stock,” said Vinkesh Gulati, president of Federation of Automobile Dealers Associations (FADA), an apex lobby group of automobile dealerships.

“All dealers had nearly cleared their BS-IV stock. There was near-nil inventory and hence, an opportunity for stocking up was there, which reflected in the wholesale numbers,” said Nikunj Sanghi, managing director at JS Fourwheel Motors and past president of FADA.

Recovery of has also reignited the debate over whether should reverse the conventional practice of reporting figures of wholesale data (despatches to dealers) and instead switch to reporting retail data (sales to end-customers). numbers are a barometer of the country’s economy. Gulati, the new president of FADA, said he would keep on pressing the industry to adopt retail sales as that would give a true picture of the ground reality.

ALSO READ: Little gain from Kamath Panel proposals, say auto dealers, component makers

“Every dealer works on a dealer management software, which is a platform for So their data on sales gets updated in real time. But they don’t report it. Their message is not for the dealers or ground reality. It’s for their shareholders,” said Gulati, adding that in contrast to the 20-per cent growth reported by auto in August, the dealers don’t expect any growth, except in the tractor segment.

chart

However, Gulati said dealers were expecting the third quarter (Q3) to be a good sales period. This may prevent the stock push by automakers, leading to inventory pile-up. “We expect some good sales happening in Q3. Everyone is expecting October and November to be good, followed by December, when the year-end sales happen. So Q3 will be the best quarter of this year. Hence, the inventory pile-up isn’t hurting. But if the gap in wholesale is huge in September, it will pinch,” said Gulati.

Dealers say that with job layoffs and paycuts, and non-banking financial companies have become more cautious about extending credit.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, September 08 2020. 19:38 IST
RECOMMENDED FOR YOU