Liquidity is a concern for the auto industry, says car dealers association FADA

The Federation of Automobile Dealers Associations (FADA) has released the monthly vehicle registration data for the month of December. CNBC-TV18 spoke to Ashish Harsharaj Kale, president of the FADA on the inventory levels and sector outlook.

“There was a decline from October to November retail sales and from November to December that is now maintained at the same level. So there is no further decline in terms of year-on-year (Y-o-Y) numbers. Month-on-month (M-o-M) from November to December it is expected because November was Diwali season, which is one of the peak seasons. Although the season was not as good as we expected but still the numbers are quite high. Therefore, this drop was expected,” Kale said on Tuesday.

“If you look at our press release, towards the end of December, our numbers have reported some very good movement in showrooms and some very good retails. So getting into January, we are hoping that some positive sentiment is returning to the market. However, yes, overall it is not a very healthy picture even today,” he added.

“Normally during festival season, dealer stock up the inventory but since the retails did not happen, starting of December our opening inventory was very high. If you would see the numbers being released by all the original equipment manufacturers (OEMs), you will see quite muted growth or in some cases, degrowth in their wholesale billings. As I have said retails have been fairly well. I won’t say they are as per our expectations but fairly well. So there has been quite a good amount of reduction in inventory levels as far as passenger vehicles is concerned. We are almost close to normalcy, I won’t say 100 percent normal but definitely much better than what it was at the start of December. In two-wheeler that inventory still remains a big concern,” said Kale.