Retail auto sales fell 7.17 per cent year-on-year in January

Retail sales of automobiles across categories fell by 7.17 per cent year-on-year in January to 17,50,116 units on account of weak sentiment, upcoming emission norm and a fall in overall economic activity, according to latest Federation of Automobile Dealers Associations (FADA) data.

FADA president, Ashish Harsharaj Kale said, “Auto sales continue to be in the negative territory in the month of January, except for 3W, with many consumers still not concluding on their decisions. Ongoing Transition of BS-IV to BS-VI emission norms is also a factor in delayed purchase decision.”

“Overall Weak Economic sentiment continues and even the Budget 2020, although an inclusive budget with growth drivers for the mid to long term, did not have any direct measures nor any immediate growth Spurring initiatives for the Auto Sector.” Retail sales of two-wheelers witnessed steepest decline in January, falling 8.82 per cent y-o-y to 12,67,366 units, while retail passenger vehicle sales fell 4.61 per cent 2,90,879 units during the month.  Commercial vehicle sales dipped 6.89 per cent to 82,187 units.

January was the second consecutive month of decline in retail sales of passenger vehicles after it witnessed marginal recovery in the festive months of October and November when automakers were seen offering record discount. 

Since then, most of the automakers had gone for a price hike in January and are expected to announce one more hike in April this year when the country fully switches to BS-VI emission norms. The industry expects the market to recover from this dual price hike and show signs of growth only in the second half of the upcoming financial year 2020-2021 (October-November).

FADA too believes near-term demand situation will continue to be dynamic. The retail body has asked OEMs that any BS-IV vehicle billed further which are not against specific customer orders, to be on returnable basis to avoid financial loss to its members after its appeal in SC for extension of sale beyond 31st of March for dealer stock was not considered.

Most manufacturers are already witnessing decline in wholesales as production has been reduced to control inventory of BS IV compliant vehicles. According to Siam data released earlier this month, domestic auto sales in January 2020 fell 13.83 per cent to 1,739,975 units as against 2,019,253 units sold in the same month last year.

FADA to work with banks
FADA said it will co-ordinate with Banks and NBFC’s to ensure financing of BS-IV Inventory till SC mandated date March 31 to ensure liquidation of the BS4 stocks and smooth transition to BS6 without any financial implication to any stake holder. It also urged Centre to continue announcing positive measure to return to growth trajectory.