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Rediff.com  » Business » Dull Diwali sales lead to unsold cars piling up with dealers

Dull Diwali sales lead to unsold cars piling up with dealers

November 16, 2018 08:35 IST

While two-wheeler sales are down 15 per cent year-on-year, passenger vehicles sales are lower by 5-7 per cent.

Photograph: Kind courtesy, Pixabay.com

Snapping a three-month decline, passenger vehicles sales increased marginally in October over a year-ago period as high base effect of the last year faded, said Society of Indian Automobile Manufacturers (Siam) on Friday.

However, a dull festive season, which ended with Diwali, indicates going may not be easy in the months ahead.

Automakers dispatched 284,000 units of PVs in October against 279,000 units, up 1.55 per cent over a year ago.

Most of the other segments such as commercial vehicles, two-wheelers, and three-wheelers reported a high double-digit growth during the month.

Auto firms in India count despatches to dealers as sales. Cars sales remained almost flat, increasing to 187,000 units from 185,000 last year.

"We are happy that PV sales have come in the positive terrain after three months," said Vishnu Mathur, director general at Siam.

The sales in the months ahead, however, will be governed by a host of factors such as liquidity situation at financiers, fuel prices, and interest rates, which have impacted sales in the recent past, he said. 

The retail sales or sales to customers, which are not reported by manufacturers in India, however, show not all is hunky-dory for auto sales in the world's fastest-growing market.

 

A muted Navratra, Dussehera, and Diwali, which account for 20 per cent of annual sales for PVs and a third for two-wheelers, have led to stock-piling at dealerships across manufacturers, said a spokesperson at Federation of Auto Dealers' Association.

With the exception of commercial vehicles, sales have been lower than the last year's festive season, said Saharsh Damnani, chief executive at FADA, adding that two-wheelers have been worst hit.

While two-wheeler sales are down 15 per cent year-on-year, passenger vehicles sales are lower by 5-7 per cent.

The pre-festive season inventory for two-wheelers and PVs was 60 days and 45 days, respectively.

At the end of all the festivals, it stands at 50 days for two-wheelers, and 35-40 days for PVs, which is unusually high, said Damani.

"The high inventory levels will put lot of pressure on dealers and manufacturers as the year draws to a close," he said, pointing out that it would force them to offer high discounts to make way for new calendar year models.

PV sales skidded 3.6 per cent in the quarter ended September 30, over the corresponding quarter a year ago.

Sales had got a boost in the year-ago quarter, following the implementation of goods and services tax on June 1, 2017. The impact was normalised in the following month.

Meanwhile, driven by the motorcycles, which advanced 20.14 per cent over last year, total two-wheeler sales were up 17.23 per cent in October to 2.53 million units a year ago.

Scooters, too, reported a 12 per cent increase 643,000 compared to last year.

Sales of trucks and buses also jumped 24.82 per cent to 87,147 units during the month compared with the last year.

Cumulatively, vehicle sales across categories registered a growth of 15.33 per cent to 2.4 million units, it added. 

"It has been a fairly tepid performance by passenger vehicles. Within this segment, utility vehicles have shown a little more interest. It appears that the interest rates, fuel prices and insurance cost have been the cause. However, the volumes are still at a decent level and if it continues at the same level the next 5 months, it will end up with a high single digit growth," said Sridhar V, partner, Grant Thornton India, in a statement.

Motor cycles and commercial vehicles have been the bright spots and helping maintain a healthy level of growth for the auto sector, he said.

Shally Seth Mohile in Mumbai
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