The latest data released by the Federation of Automobile Dealers' Association (FADA) shows that retail sales in the 42-day festive period this year were flat compared to last year, unlike the numbers in October which were widely cheered by the industry.
While passenger vehicle sales grew 11 percent and two-wheeler sales improved 5 percent year-on-year in October, festive period sales spread over 42 days this year, vis-a-vis last year, were not so positive, with a flat 1 percent growth for passenger vehicles, and a 2 percent decline for two-wheelers.
The festive season this year was rare as both Navratri and Diwali fell in October itself. While that explains the positivity in October retail figures, the like-to-like festive season comparison by FADA puts forth a more realistic retail sales picture.
OEMs had reported record single-day deliveries on Dussehra and Diwali in October, the momentum largely emanating from record promotions, discounts and postponement of purchases.
FADA, however, has reported commercial retail volumes in the negative double digits for both periods, as retail sales continued to fall in the face of slow economic activity, low availability of freight and financing difficulties.
Inventories at dealerships in the month of October have come down to 25-30 days for passenger vehicles, and 35-40 days for two-wheelers, according to dealers surveyed by FADA.
"FADA especially appreciates the actions taken by our 2W OEMs for delivering on their commitment to reducing stock with festival retail growth. Although not at FADA recommended level of 21 days, 2W inventory has reduced from alarming levels. PV inventory, already at reasonable levels, has further reduced and now almost at the recommended level with all our principals taking strong and positive steps towards stock reduction. CV inventory also reduced although with retails continuing to be weak, further wholesale regulation is required to reach FADA’s 21 days recommended levels", Ashish Kale, president, FADA, said in an official release.
Kale also highlighted the importance of stock management in "heading into the unknown territory of BS6 transition" as "more needs to be done towards inventory reduction to avoid dealer losses".
