Festive Season Drives October Sales Higher, Says Auto Dealers’ Body

Sales of cars and two-wheelers snapped their declining trend in October after deep discounts during the festive season lured buyers to showrooms.

Retail auto sales, measured by vehicle registrations, clocked a 4 percent year-on-year growth in October, according to data released by the Federation of Automobile Dealers Associations. Passenger vehicle sales recorded the highest growth across categories, followed by two-wheelers—which account for nearly 78 percent of the overall vehicle registrations. Commercial vehicle sales, however, dropped during the month.

The festive season saw a very good customer footfall at dealerships across most of the geographies, FADA President Ashish Harsharaj Kale told BloombergQuint. “October retails were in the positive giving a much-needed respite to the auto industry and especially our dealer community after months of de-growth,” he said, adding that the consumer sentiment was positive and purchase decisions were concluded as used to be during the growth years.

The trend, however, remained negative when compared to the festive season last year. Overall vehicle registrations in the 42-day festive period in 2019 were down 2 percent compared to last year, as per data provided by FADA. This was mainly led by weak commercial vehicle sales—which fell more than 18 percent. On the other hand, passenger vehicle sales remained largely flat.

The 42-day festive period ranges from first day of Navratri to 15 days after Dhanteras as there is a time lag of 10-12 days between delivery and registration.

The auto industry was struggling to push sales since the festive season last year. Increased upfront insurance costs and higher fuel prices kept buyers away, forcing automakers to cut production or shut showrooms as inventory piled up.

Inventory across all three categories, however, eased in October as retail sales went up. Two-wheeler inventory saw a sharp decline over the previous month, buoyed by strong sales and production cuts by automakers.

According to FADA, these were the average inventory levels in October:

• Passenger vehicles: Fell to 25-30 days from 30-35 days in September.
• Two-wheelers: Fell to 35-40 days from 60-65 days in September.
• Commercial vehicles: Down to 40-45 days from 50-55 days in September.

Outlook

Dealers, according to Kale, remain cautious over the near- and mid-term owing to the uncertainties from the transition to stricter Bharat Stage VI emission norms and absence of any conclusive evidence of demand pickup in rural areas. Nearly 48 percent dealers expect sales in November to remain flat over the previous year, he said.