Vehicle registrations up in February, but not by as much expected

FADA said liquidating BS-IV inventory remained a challenge, especially with banks and NBFCs reluctant to fund new BS-IV orders. CNBC-TV18 had reported that top banks stopped financing BS-IV wholesale orders starting February 15, and even earlier in some cases.

The situation in two-wheeler inventories was worrying, FADA said. Its survey of dealers revealed that "a very high number of 2W dealers will not be able to fully liquidate their BS-IV inventory and expressed inadequate support from their OEMs (original equipment manufacturers) for 100 percent liquidation of this stock."

Consumer sentiment has also taken a beating due to the coronavirus scare and the stock market crash, prompting many prospective buyers to defer their purchases, FADA said.

OEMs have been expressing concerns over ramping up BS-VI production in the absence of adequate supplies from China, making the transition to the cleaner emissions regime more difficult. Considering this environment of uncertainty, the auto sector’s outlook for the month of March remains negative, FADA added.

FADA says it will re-iterate its demands for a relief package for the industry – including measures towards a temporary reduction in GST rate on new vehicles, and an incentive-based scrappage policy to revive sales of commercial vehicles.