Retail Sales Number Of 2Wheelers Down By 9% And Passenger Vehicles By 2 Percent - FADA

The Federation of Automobile Dealers Associations (F A D A) has released the Monthly Vehicle Registration Data for the Month of April’19.

April’19 Retail Sales

Commenting on April’19 performance, F A D A President, Mr Ashish Harsharaj Kale said, “The month of April ended on a negative note. Amongst the Categories on a YoY basis, Commercial Vehicles and Three Wheelers, which registered highest growth during FY’19 witnessed highest fall in the month of April, while 2W and PV De-grew -9% and -2% respectively.”

On a Year on Year basis, there was de-growth in all the categories as April’18 had a very high base. The only positive and that too on a MoM basis was shown by the Commercial Vehicles category which grew by 2%.

Near Term Outlook

Commenting further F A D A President said, “The Near Term Outlook Continues to be Negative to Neutral with the absence of any immediate positive triggers which could affect Retail Sales.

Despite the Current Negative Retail Situation, which we expect to Continue for the next 8-12 weeks, we still believe that the Outlook for Auto Retail can soon turn positive if below mentioned triggers turn positive:

1- A stable Government with Continued Development Focus

2- An average to above average monsoons with an even spread.

3- Continued easing of liquidity by Reserve Bank of India”

Dealer Inventory

Inventory levels continue to remain high and requires further correction than done in recent months. We believe that a High Inventory at this time is an Extra Burden on the Auto Dealers especially when the current environment is witnessing Negative Sales Growth combined with Extremely Tight Working Capital Availability for the Auto Retail Sector.

Looking at the Overall De-growth in Volumes, Weak Consumer Sentiment, Uncertainty in the Market and entering into an Year which will witness BS-VI Implementation impacting the dynamics of the industry,  F A D A  will be strongly advocating for a Leaner Dealer Inventory of 21 days (15days Inventory + 7days of In-Transit Inventory)  for its members thus helping us reduce a huge cost burden and allow us to stay afloat in these challenging times.

Liquidity

Consumer Liquidity for the Month of April has seen marginal Improvement but continues to be Tight and still far away from the Levels seen in Normal times.

On Dealer Liquidity Mr Kale Commented, “F A D A is Extremely Concerned at the Dealer Liquidity which Continues to remain Very Very Tight and Access to Working Capital for Dealers has reduced Further with the Banking system taking a Negative View towards Auto Retail in the Current Circumstances”

Faced with an unusually High Number of Dealership Closures in recent times, especially in Metro and Tier 1 Cities, a substantial number of which were due to Financial Stress caused by Accumulated Losses and Reduced Access to Working Capital Needs, F A D A will be engaging with Our Newly Elected Policy Makers of the Country along with  the Reserve Bank of India to work upon a Separate categorisation for Auto Retail and Its Funding Requirements for Long Term Sustainability of Dealers

F A D A will also be soon Engaging more Deeply with all Stake Holders on the Topic of Dealer Viability for Long Term Profitable Survival of the Dealers.

On the Long-Term Outlook, F A D A President commented, “In a Rapidly Growing Country like Ours, which is heading towards being the Global Leader, the Mobility Needs of a Growing Nation are best served by the Automobile Sector.

The Fundamentals and the Long-term Prospect of the Indian Auto Industry and along with it the Dealership Business continues to be Extremely Strong and the Auto Dealership Business will continue to be One of the Highest Employment Generators and Tax Collectors as We Navigate through this Difficult Period into Good Times.’’

Vehicle Registration Data from FADA