The Federation of Automobile Dealers Associations (FADA) on Wednesday said that inventory levels continue to be high and are acting as additional roadblocks for an industry already hamstrung by faltering sales.
The near-term outlook continues to be negative to neutral in the absence of any immediate positive triggers for pick up in retail sales, it said.
Given the overall decline in volumes, weak consumer sentiment, paucity of working capital, and an uncertain environment as the industry enters a year that will witness the rollout of the BS-VI emission norms which could change the dynamics of the market, FADA will be advocating a leaner dealer inventory of 21 days for its members, its President, Ashish Harsharaj Kale, said. The current level ranges between 45 and 50 days. He added that it will help bring down the cost burden and allow dealers to stay afloat in these trying times.
According to FADA’s monthly report, retail sales of passenger vehicles in April declined 2 per cent to 2,42,457 units compared with the same period last year. Two-wheeler sales also fell 9 per cent year-on-year (YoY) to 12,85,470 units last month from 14,09,662 units in April 2018.
Commercial vehicle sales declined by 16 per cent YoY to 63,360 units against 75,622 units in April last year. Three-wheeler sales were also down 13 per cent YoY to 47,183 units.
On a YoY basis, there was de-growth in all the categories as April had a high base, FADA said. Despite the dismal retail situation, the industry is optimistic about better months ahead, Kale said.