The automobile industry contributes 7.1 percent to India’s gross domestic product (GDP) and is considered a major economic force. To date, the health of this sector was judged by wholesale data brought out every month by the Society of Indian Automobile Manufacturers (SIAM).
Experts often said wholesale data did not reveal the full picture of how a product was faring in the market as there was no retail data available. This is all set to change from the first week of January.
The Federation of Automobile Dealers Association (FADA) has begun the task of collating retail data and will bring out numbers every month from January onwards. FADA represents around 15,000 dealers, who own 25,000 dealerships across the country.
In a first, FADA had brought out festive data on November 23, which showed that during the 42 day festive period, the number of registrations fell by 11 percent year-on-year.
Inventory levels according to the association were 50 days for two-wheelers and 45 days for passenger vehicles, which is higher than normal. Wholesale data released by SIAM also indicated an inventory pile up.
The data revealed a 22 percent drop in production for passenger cars, a 3.43 percent drop in passenger vehicle sales and a 10.97 percent drop in sales for medium and heavy commercial vehicles.
This had prompted FADA president Ashish Harsharaj Kale to say, “We have not seen such a dull festive season in the past few years. Many negative factors came into play during this season, which weakened the consumer sentiment and postponed their purchase decision. It is a matter of deep concern for our dealership community.”
CNBC-TV18 spoke to dealers, who said December month hasn’t been encouraging either. Industry sources said most dealers in the country have 6-8 weeks of stock in their inventory, when the normal limit ideally shouldn’t exceed two weeks.
Sources told CNBC-TV18 that the number of vehicle registrations so far in the month of December showed a 20 percent de-growth year-on-year.
Top dealers tell CNBC-TV18 that bringing out retail data each month will help correct inventory levels each month as the data would impact the market capitalisation of original equipment manufacturers (OEMs) and reduce pressure on dealerships to buy vehicles even when there is enough inventory.
They also added that retail data would be good for the overall health of the industry as currently at least 30-40 percent of the dealerships are over-leveraged. Sources said OEMs have been against retail data being brought out every month. Perhaps, this is the reason why FADA is taking small steps.
From January onwards, the association of dealers will bring out overall retail data for passenger vehicles, commercial vehicles and two-wheelers. They aim to bring out brand wise data from March-April onwards and eventually introduce the system of monthly press conferences as well.
