Auto Dealers Brace for Subdued Festive Sales Amid Slowdown
Automakers were banking on the upcoming festive season to pull the industry out of the slump.
Auto dealers don’t expect the upcoming festive season to come to their rescue as India faces its worst auto slowdown in nearly two decades.
Retail auto sales dipped to a 20-month low in August despite deep discounts. Automakers were banking on the upcoming festive season to pull the industry out of the slump. The festive period accounts for nearly 30 percent of the sales during a year.
But the situation looks grim. “Festive sales aren’t looking good this year,” Vinkesh Gulati, vice-president of the Federation of Automobile Dealers’ Association and a dealer of Mahindra & Mahindra Ltd., told BloombergQuint. “We don’t see any growth happening. Either the de-growth will be very low or at least it will be flat in the festive season.”
Gulati said while inquiries have gone up, the confusion about a rumored goods and service tax rate cut has created more problem for the sales to happen. “The customers have already delayed their buying.”
Echoing a similar sentiment, Ashish Agarwal, a Lucknow-based auto dealer, said sales during the festival season will continue to be down by 10-20 percent. “While the queries are coming but they aren’t translating into sales,” he told BloombergQuint.
According to N Raja, deputy managing director at Toyota Kirloskar Motor Pvt. Ltd., no festive season can “deliver a 30 percent drop to a positive”. “It can only cover you to 5-10 percent in the negative growth,” he said, adding that if the industry expects wonders to happen in the festive season, it is not going to happen.
To boost auto sales, the government had last month announced several measures including a new scrappage policy, deferral of revision of one-time registration fee till June 2020, asking government departments to buy new vehicles, among others.
The overall sentiment is down, even if there is a GST cut, it won’t lead to spurt in sales, a Haryana-based two-wheeler dealer said requesting anonymity. The inventory pileup is more than 60 days and the trucks are waiting to be unloaded, he said.
The auto slowdown has already forced companies to lay off contract workers and dealerships to shut showrooms.
Still, Rajesh Goel, senior vice-president and director of Marketing and Sales at Honda Cars India, is hopeful of an uptick. “The signs aren’t great but we will see some improvement, how much and by what is to be seen,” he said.