Economy

Passenger vehicle retail sales declined 7% y-o-y in August: FADA

Our Bureau New Delhi | Updated on September 09, 2020

Entry-level PVs were in high demand as personal mobility is being preferred with the Covid-19 pandemic showing no signs of slowing down   -  AFP

Automobile dealers body cautions manufacturers against inventory build-up in September

Passenger vehicle (PV) retail sales during August 2020 declined by 7 per cent year-on-year (y-o-y) to 1,78,513 units compared with 1,92,189 units in the corresponding month last year, says the latest report from the Federation of Automobile Dealers Association (FADA).

The retail sales of two-wheelers also declined by around 29 per cent to 8,98,775 units during the month as against 12,60,722 units in August 2019.

Commercial vehicle (CV) sales declined by 57 per cent y-o-y in August 2020 to 26,536 units as against 62,270 units in same month last year.

Arrest in decline

“With the start of the festival season and the government’s continued effort to open up India, August saw good numbers compared with the immediate previous months. August also saw an arrest in the decline, and the pull-back efforts on all fronts were visible, though on y-o-y, all categories except tractors continued to fall, though at a slower pace,” said Vinkesh Gulati, President, FADA.

After a period of five months, the decline in PV sales reduced to single digits, he said, adding that customers who were sitting on the fence finally concluded their purchase during festivals of Janmashtami and Ganesh Chaturthi. Entry-level PVs were in high demand as personal mobility is being preferred with the Covid-19 pandemic showing no signs of slowing down.

Apart from the rural market, which has been showing revival signs, urban centres showed initial signs of demand pull-back for the first time. With the government’s priority in spending towards rural development and agriculture, coupled with a good monsoon and a healthy sowing season, tractor, small CVs and entry-level PVs positively impacted August sales, the industry body said.

Going forward, in the near term, September brings with itself the “inauspicious” 16-day ‘Shradh’ period. This, coupled with 30 days of ‘Adhik Maas’ (an extra month in the Hindu calendar that is inserted to keep the lunar and solar calendars aligned) is considered inauspicious in North, East and West India when no high-value transactions take place, it said.

FADA said the moratorium period from banks has ended on August 31. While manufacturers are dispatching vehicles to dealers with a purpose of stocking up inventory for the upcoming festival season, retail sales are still at 70-75 per cent levels despite the low base of last year.

FADA has, therefore, cautioned all manufacturers and the dealer fraternity to avoid excessive inventory build-up that might lead to unmanageable interest cost, which could further result in dealership closures.

Published on September 09, 2020

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