Wholesale auto numbers in the month of October showed a positive sign for vehicle sales recovery. However, numbers on the retail front painted a different story altogether.
According to October Vehicle Registrations data released by the Federation Of Auto Dealers Association of India (FADA), Vehicle registrations in October grew by 5.11% Month-On-Month (MoM), however, it continued to fall by 24% Year-on-Year (YoY).
In the month of October, 2-wheeler registrations were down 26.82%, 3-wheeler registration degrew by 64.50%, CV grew by 30.32% and PV registrations degrew by 8.80%. However only tractor registration continued its positive momentum, registrations grew by 55.53%.
Vinkesh Gulati, President, FADA said, "October continues to see positive momentum on monthly basis but on a yearly basis the negative slide continues to increase. 9 days Navratri period witnessed robust vehicle registrations but could not save October to go in red as compared to last year when both Navratri and Diwali were in the same month."
He further added that the new launches continued to be in demand in PV segment, entry-level motorcycles witnessed a lean demand in the 2-wheeler segment.
The data also pointed out the robust demand for small commercial vehicles due to local goods transportation back to pre-covid levels, but the medium and heavy commercial vehicles segment continued to bleed.
FADA has urged the government to urgently announce an attractive incentive-based scrappage policy. The government should release funds for infrastructure projects which it has awarded as this will help demand generation and will lead to higher production of vehicles.
As far as near term outlook is concerned, there is a sense of cautiousness amongst customers due to the third wave of COVID-19. FADA further stated that due to the lockdown announced in few European Countries, the procurement of spares will also be a cause of hinderance for smooth supply of vehicles in Indian markets.
The data also pointed out a worrisome point, inventory levels are at its highest during this financial year.
FADA once again cautioned both OEMs and Dealers to keep a check on vehicle inventory as post festivals, demand may remain subdued which might impact dealers financial health thus leading to closures and job losses.