Retail Auto Sales Fall After Two Successive Months Of Growth
Commercial vehicle sales recorded the highest drop across categories in December.
Sales of cars and two-wheelers fell in December after they rose in the previous two months as weak consumer sentiment hurt demand.
Retail auto sales, measured by vehicle registration, fell 15 percent year-on-year in December, according to data released by the Federation of Automobile Dealers Associations.
Commercial vehicle sales recorded the highest drop across categories, followed by two-wheeler sales, the data showed. Three-wheeler sales, however, clocked a marginal increase during the month.
The contraction in sales wasn’t on expected lines as the inquiry levels all through the month were quite robust, FADA President Ashish Kale told BloombergQuint. “Consumer sentiment continues to be very weak as customers didn’t conclude the purchase even after making efforts to inquire and despite the best offers being available.”
WATCH: FADA on vehicle registrations in December and outlook going forward
Inventory, however, improved across the board as all three categories witnessed a decline over the previous month, Vinkesh Gulati, vice-president at FADA, told BloombergQuint. This, he said, was due to tighter inventory management by dealers and reduced wholesale billing from automakers.
Despite the reduction in inventory days, dealers expressed concern over business in light of the current weakness in demand and the impending transition to the new BS-VI emission norms. “The sharp decline in growth has denied the dealer community an opportunity to reduce its BS-IV Inventory making the transition to BS-VI trickier,” Kale said.
According to FADA, these were the average inventory levels in December:
- Passenger vehicles: Fell to 20-25 days from 25-30 days in November.
- Two-wheelers: Down to 30-35 days from 35-40 days in November.
- Commercial vehicles: Dropped to 30-35 days from 35-40 days in September.
Outlook
Dealers remain cautious over the near-term outlook. “The overall demand situation continues to remain grim and we expect continued weakness through the March quarter owing to the BS-VI transition,” Gulati said. “However, we expect passenger vehicle do relatively better. On the other hand, we are still not seeing any signs of recovery as far as commercial vehicles and two-wheeler segments are concerned.”