Passenger vehicle retail sales dip on supply woes

New Delhi: Automobile dealers' body FADA on Monday said passenger vehicle (PV) retail sales in October witnessed a year-on-year decline of 8.8 per cent to 2,49,860 units, as registrations slowed down owing to supply issues.

According to the Federation of Automobile Dealers Associations (FADA), which collected vehicle registration data from 1,257 out of the 1,464 regional transport offices (RTOs), PV sales stood at 2,73,980 units in October 2019. Two-wheeler sales declined 26.82 per cent to 10,41,682 units last month, as compared to 14,23,394 units in October 2019.

Commercial vehicle sales also slipped 30.32 per cent to 44,480 units, as against 63,837 units a year ago. Similarly, three-wheeler sales fell 64.5 per cent to 22,381 units last month, from 63,042 units in the year-ago period. Tractor sales, however, grew by 55 per cent to 55,146 units last month, against 35,456 units in the same month last year. Total sales across categories declined 23.99 per cent to 14,13,549 units, last month compared to 18,59,709 units in the year-ago period. Commenting on the sales data, FADA President Vinkesh Gulati said the Navratri period witnessed robust vehicle registrations but could not save October to go in red as compared to last year when both Navratri and Diwali were in the same month. While new launches continued to be in demand in the passenger vehicle segment, entry-level motorcycles witnessed a lean demand in the two-Wheeler segment, he added.

"With supply-side mismatch, most of the passenger vehicle dealers ended up with limited stock of high selling items and odd variants, which did not attract much demand. This coupled with lower discounts, compared to last festivals also played a spoilsport," he noted. Gulati said that while small commercial vehicles were witnessing robust demand due to local goods transportation back to pre-Covid levels, the medium and heavy commercial vehicle segment continued to bleed.

"FADA urges the government to urgently announce an attractive incentive based Scrappage Policy. It also requests the government to release funds for infrastructure projects which it has awarded as this will help demand generation and will lead to higher production of vehicles," he added.

On the sales outlook, Gulati said as the industry approaches the last leg of festivals and many cities in the middle of a third Covid wave, there is a sense of cautiousness amongst customers. Due to the lockdown announced in few European countries, procurement of spares will also be a cause of hindrance for the smooth supply of vehicles in Indian markets and this will create a supply and demand mismatch thus affecting the passenger vehicle sales, he cautioned.

"FADA once again cautions both OEMs and dealers to keep a check on vehicle inventory, as post festivals, demand may remain subdued. Since inventory levels are at its highest during this financial year, it may impact dealers' financial health, thus leading to closures and job losses," Gulati noted.