FADA Releases May’20 Vehicle Registration Data

The Federation of Automobile Dealers Associations (FADA) has released the Monthly Vehicle Registration Data for the Month of May’20.

May’20 Retail Sales

Commenting on how May’20 performed, FADA President, Mr Ashish Harsharaj Kale said, “For the first time in history, the month of April witnessed Zero Retails. While lockdown was gradually relaxed beginning May, Auto Dealerships and workshops open for the first time after 40 days in many cities.

At the end of May, out of 26,500 outlets about 60% showrooms and 80% workshops were operational across the country.

May registrations are hence not indicative of the demand situation as the Lockdown still continued in many parts.

First 10 days of June witnesses extremely low demand despite most dealerships which are now open for business. Weak consumer confidence especially in urban areas continue to haunt as customers stay away from concluding their purchase due to threat of community spread and return of complete lockdown persists.

With 7.6% of GDP, a workforce of several millions and a multiplier effect for many supporting sectors, Auto Industry can be the driving force in boosting consumer confidence and improving sentiment, if supported with short term stimulus to revive demand as return to normalcy seems very difficult till the festive season.

Mobility still being a necessity and not luxury in a growing country like ours, demand stimulus along with credit support can bring Auto Sales back in positive zone within 30-60 days and help shore up consumer confidence.”

Outlook for June

With an assumption of no further lockdown and continued reopening measures, there will be substantial pick up in Auto Retails in comparison to May, but the overall outlook continues to be grim with projected sales to witness a de-growth upwards of 25% YoY.

Urban Demand will continue to face challenges ahead with Covid-19 uncertainty. On the flipside, the Government’s push for Infrastructure spending and the recent positive measures announced for Agriculture sector will help support rural demand. It will further strengthen with the normal spread of monsoon which will help Tier 2 and 3 Dealers face lesser de-growth compared to their urban colleagues.

Dealer Sentiment

A projected annual de-growth of 35% by SIAM on top of the 18% de-growth faced last year, the Dealership Community faces its toughest years ever as volumes are estimated to half in a span of 20 months. 

With no direct support as business community, except for the moratorium extension given to all businesses, the Dealership Community looks forward to an early recognition as an MSME to avail Government support for the survival and for its 40 lakh workforce.

With cost cutting having its limitations due to the nature of the Business, FADA is strongly pursuing with all our Principals to correct the long pending anomaly of low sales margin and revise it upwards to 7% to get it at par at least at the lower band of global dealer margin which ranges from 7%-14%.

Lakhs of jobs and hundreds of dealers survival is at stake if demand de-growth predictions hold true and operating economics remain unchanged. FADA will strongly continue the campaign for higher business margins for survival of its members in these uncertain times as it will also help us in self sustenance as many more disruptions will come in future in a globally connected world.

Inventory

Due to the Lockdown situation, Inventory analysis with regards to current retail will not depict a realistic scenario and hence will be resumed from June onwards.

Charts showing Vehicle Registration Data for February’20 with YoY comparison can be found below:

Vehicle Registration Data for May’20