MUMBAI: Retail sales of automobiles registered a steep decline in December after two consecutive months of growth, despite the prevalent discounts and offers in the market.
The number of registrations of vehicles at regional transport offices (RTOs), which is a proxy for retail sales, came down by 15% during the month of December as compared to a year ago. The decline was on an already low base since the ongoing sales slowdown had already started showing its effects by December 2018.
Registrations declined for all categories of vehicles except three-wheelers, the numbers for which improved marginally. The data was sourced from the road transport and highways ministry’s VAHAN platform and collated by the federation of automobile dealers’ associations (FADA), a retailers’ lobby body.
The sales decline was unexpected, vehicle retailers say, since inquiries from customers were high throughout the month. Discounts and offers also continued to remain high during December as automakers look to liquidate the existing stock near the year-end before new model-year rolls in.
“Consumer sentiment continues to be very weak as customers did not conclude on the purchase even after taking the efforts of inquiring and despite the best offers being available,” said FADA President Ashish Kale.
The Indian auto industry is gearing for a regulation change from April 2020 when BS-VI emission norms will become effective. Vehicles of older make cannot be sold after 1 April this year and a sales decline so close to the deadline raises concerns for automakers and dealers who look to clear all their inventory of BS-IV norms compliant inventory.
“The sharp decline in growth has denied the dealer community an opportunity to reduce its BS-IV inventory making the transition to BS-VI trickier,” Kale said.
Production cuts from manufacturers, however, ensured that the inventory with dealers reduced slightly by the end of December.
Average inventory with commercial vehicles and two wheelers dealers came down to between 30 and 35 days’ equivalent as compared to 35 and 40 days a month prior. Inventory with passenger vehicles dealers, meanwhile, reduced to an average between 20 and 25 days from 25 and 30 days earlier, data provided by FADA showed.