Vehicle Registrations in September saw a 10.24% drop on a year-on-year basis as per the data released by the Federation of Automobile Dealers Associations (FADA). However, on a month-on-month (MoM) basis, registrations rose by 11.45%. While 2W degrew by 12.62% and 3W registered a dip by 58.86%, on the other hand, passenger vehicles grew by 9.81%, rising for the first time since lockdown. While commercial vehicles degrew by 33.65%, tractors registered a whopping 80.39% growth.
Vinkesh Gulati, President, FADA said, "Passenger Vehicles for the first time saw positive growth coming back on a YoY basis. With banks becoming more considerate to finance vehicles, Entry level passenger vehicles saw good demand. Lower base during the last financial year also helped the cause."
He further added that tractor sales continued its dream run with good Rabi season resulting in good disposable income.
In comparison to the urban market, the rural market saw its rub-off effect on two-wheelers, small passenger vehicles and small commercial vehicles.
Overall, 2-wheeler, 3-Wheeler, and Commercial Vehicles continued to march ahead on MoM basis and inched up to narrow their gap with last year’s sale.
Pre-COVID levels are yet to be seen across all categories. Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat and West Bengal are now showing signs of revival as economic activities in these states are at its peak since lockdown began in March
As far as near term outlook is concerned, FADA anticipates a high growth period during the festive season. The association feels that the government’s consideration to waive off interest on interest during moratorium up to Rs 2 crore will help in improving customer sentiment.
With Banks and NBFCs also gearing up for various festival offers to woo retail customers, auto sales is expected to witness a renewed growth and may close at par with last year. Passenger vehicles and two-wheelers are expected to lead the way.
On the inventory front, 2W inventory stands at 45-50 days, PV stands at 35-40 days. FADA feel that any dampener in vehicle sales during the upcoming festivals will have a catastrophic impact on dealers' financial health.
FADA has advised extreme caution to both OEMs and the dealers to avoid building any further inventory as this may lead to a disastrous situation similar to last 2 festive seasons when sales were below the mark.