The Federation of Automobile Dealers Associations (FADA) has released the Monthly Vehicle Registration Data for October’20. While vehicle registrations in October have grown by 5.11% month-on-month (MoM), it continued the year-on-year (YoY) decline, falling by 24%.
On YoY, 2-wheelers degrew by 26.82%, 3-wheelers by 64.50%, CVs by 30.32% and PVs by 8.80%. Only tractors continued their positive momentum, growing by 55.53%.
With only Navratri in October as compared to both Navratri and Diwali in October last year, October registrations did not show positive growth. As the country enters the last leg of festivities, even though customer walk-in’s have improved, healthy conversions are yet to see light of the day.
Dealer inventory for both 2W and PV are at its newest high in this financial year. In this regard, FADA has requested all OEMs, with a special request to 2W OEMs, to assess the on-ground inventory level and curb production accordingly.
October’20 registration
Commenting on how the vehicle sales fared in October’20, Vinkesh Gulati, FADA President, said: “October sales continued to see positive momentum on a monthly basis but on a yearly basis the negative slide continues. The 9-day Navratri period witnessed robust vehicle registrations but could not save October from going red as compared to last year when both Navratri and Diwali fell in October.”
Sharing a segment-wise review, he said: “While new launches continued to be in demand in the PV segment, entry-level motorcycles witnessed lean demand in the 2W segment. With supply side mismatch, most of the PV dealers ended with limited stock of high-selling items and odd variants which did not attract much demand. This coupled with lower discounts, compared to last festivals played spoilsport.
While small commercial vehicles are seeing robust demand due to local goods transportation back to pre-COVID levels, the medium and heavy commercial vehicles segment continued to bleed. FADA has urged the Government to urgently announce an attractive incentive-based scrappage policy and also release funds for infrastructure projects that have been awarded as it will help generate demand and lead to higher production of vehicles.
The Government’s continued procurement of Kharif crops at MSP from farmers is leading to a higher disposable income in rural India. This reflected in robust demand in tractor segment which grew at a healthy 55% YoY.”
Near Term Outlook
As we enter the last leg of festivals and with COVID getting into its third wave in many cities, there is a sense of caution amongst customers. Due to the lockdown announced in some European countries, procurement of spares might also be a cause of hinderance for smooth supply of vehicles in the Indian market which will create a supply-demand mismatch, thus affecting the passenger vehicle sales.
FADA has once again cautioned both OEMs and dealers to keep a check on vehicle inventory especially since demand may remain subdued once the festivals are over. Since inventory levels are at their highest during this financial year, it may impact dealers’ financial health thus leading to closures and job losses.
Key Findings from FADA Online Members Survey
• Sentiments
o 43% dealers rated it as Good
o 42.6% dealers rated it as Neutral
o 14.3% dealers rated it as Bad
• Liquidity
o 43.8% dealers rated it as Good
o 41% dealers rated it as Neutral
o 15.1% dealers rated it as Bad
• Expectation in November
o 37.1% dealers rated it as Flat
o 33.1% dealers rated it as Growth
o 29.9% dealers rated it as De-growth
• Inventory
o Average inventory for passenger vehicles ranges from 35 – 40 days
o Average inventory for two-wheeler ranges from 50 – 55 days
Disclaimer:
1. The above numbers do not have figures from AP, MP, LD & TS as all these States/UT’s are not yet on Vahan 4.
2. Vehicle Registration Data has been collated as on 08.11.20 and in collaboration with Ministry of Road Transport & Highways, Government of India and has been gathered from 1,257 out of 1,464 RTOs.