Automotive dealers remain cautiously optimistic

The Sewells Group has just released the results of its fourth Automotive Dealer Confidence Index (ADCI) survey for India. This is the final edition of 2014 and captures the sentiment of auto dealers in the October-December quarter. The overall ADCI stood at +7 compared with +14 at the end of the previous quarter. Optimism levels across vehicle categories have tempered slightly as compared to the results at the end of the previous quarter. That said, the index at the end of 2014 represents a substantially more optimistic sentiment than at the start of the year.

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The Automotive Dealer Confidence Index at the end of the October-December quarter of 2014 was based on the survey done in the beginning of January 2015. Responses were received from 172 dealers across 125 cities representing 31 different brands.

The key highlights of the survey are:

• Passenger car dealers continued to remain optimistic about business prospects in spite of a duller than expected festive period. The index for the passenger car segment stood at +9 at the end of the October-December quarter as compared to +8 at the end of the July-September quarter.

• The index for two-wheeler dealers showed a significant dip in the October-December 2014 quarter when compared with the July-September quarter. The index moved from +35 at the end of the July-September quarter to +10 at the end of the October-December quarter, indicating a drop in optimism levels of two-wheeler dealers.

• Commercial vehicle dealers who were encouraged with some signs of revival in the previous survey seem to continue remaining guarded about business prospects over the next six months. The index stood at -19 at the end of the October-December 2014 quarter as compared to -3 at the end of the July-September quarter.

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• Overall, ADCI at the end of the October-December quarter stood at +7, indicating an optimistic sentiment. However, the fact that it has dropped from +14 at the end of the previous quarter points to a slight tempering of the dealer sentiment.

Mr. Jayesh Jagasia, CEO of Sewells Group India, said: “2014 has been an eventful year, and the movement of the Sewells Group ADCI echoes the same. The formation of a majority government at the Centre resulted in a spurt in optimism across the automotive retail trade earlier in the year, and we are now seeing this enthusiasm getting tempered by market realities. An impending cut in interest rates and falling fuel prices are potential drivers of continued optimism at this point. That said, the Sewells Group ADCI at the end of 2014 does indicate that automotive dealers, while positive, are approaching 2015 with a hint of caution.”

The Sewells Group ADCI survey is conducted with automotive dealers across the nation to quantify their sentiment about the automotive retail trade, with a six-month time horizon. The survey is conducted quarterly with the idea of tracking the dealer sentiment over time.

The ADCI survey delves into areas like the impact of the current economic scenario on the market, as well as the dealership business; the expected market performance as well as dealership over the next six months; the current trend in sales, inventory and profit vis-à-vis the same period last year; as well as the previous quarter; the expected levels of sales, inventory and profit over the next six months; and the future manpower strength of the business.

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The index is designed to vary between -100 and +100 where an index score of -100 represents the most pessimistic outlook and +100 indicates the most optimistic sentiment. It is expected that over time the movement of the index will become a reliable indicator of future sales performance.