The Hindu Business Line : Tight retail finance, inflation dampen auto festive outlook

New Delhi, Sept. 29 With the festive season round the corner, the combination of tight finance and high food plus commodity prices is making automobile dealers wary of sales during this peak season. While automobile companies are banking on sales in the next two months to make up for the slowdown of the past few months, automobile dealers estimate that the festive season this year may not be as good as last year.

“We estimate that considering the tight liquidity situation and macro economic factors, this Navratri sales could be lower by 20-25 per cent of what we would usually sell during the period. Overall, festive season sales could be around three per cent lower than the usual,” said Mr Rakesh Jain, Managing Director, Gautam Automobiles and past president, Federation of Indian Automobile Dealers Association.

While in the case of two wheelers the current inventory stands for 15 days - one month period, in case of commercial vehicles sluggish sales are stretching the inventory period to almost two months, he said.

Mr Jain said apart from retail finance, dealers were also getting their working capital on the condition of about 75 per cent collateral which was not the case a few months back. Similarly, Mr Jayendra Kachalia, Director, Navneet Group – which owns dealerships for Maruti, BMW, Land Rover and JCB – pointed out that sales were not happening as anticipated.

However, Mr Prem Bagga, President of FADA, had a more optimistic take on the prospects of the oncoming festive season. He felt that considering this year all festivals – Dasara, Diwali, Id and Navratri – were in the same month, sales should be good. Further, he noted that with the Government employees expecting a bonanza, thanks to the revised pay commission, there could be good cash-based purchases.

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