Auto Sales Decline By 8 Per Cent In February 2019; Two-Wheeler Inventory At Alarming Levels: FADA

The Federation of Automobile Dealers Associations (FADA) released its data on the on the total vehicle registrations for February 2019. The federation concluded that the auto sector saw an overall 8.06 per cent drop in total sales in passenger vehicles for the month, after starting the calendar year on a positive note. Total automobile sales stood at 14,52,078 units, down from 15,79,349 units sold in February 2018. The passenger vehicle inventories account for up to 60 days, twice than what was recorded in January this year, according to FADA. Two-wheeler inventories, on the other hand, have reached alarming levels of 90 days from 55 days, a month prior, extending to 100 days in certain locations across the country.

Commenting on the February sales, FADA - President, Ashish Harsharaj Kale said, "After a month of spike in PV sales in January which was largely due to year end stock clearance getting extended and few new launches which generated some excitement, the industry is once again witnessing downward trend as February turned out to be one of the slowest month for auto retails during this financial year. Indian auto sales are experiencing a prolonged slowdown as its already seen six months of slowing sales and growth reversal and positive triggers in the near term appear few.

The retail sales of passenger vehicles (PV) in February this year declined by 8.25 per cent to 215,276 units, as opposed to the 234,632 units sold in February 2018. Two-wheelers sales stood at 11,25,405 units last month, declining by 7.97 per cent over 12,22,883 units sold during the same period last year.

For commercial vehicles, retail sales stood 61,134 in February, declining by 7.08 per cent over 65,789 units in February last year. Three-wheeler sales declined by 10.32 per cent in February with 50,263 units, down from 56,045 units sold over a year ago.

Auto sales have been on a downward trend since the second half of 2018. The hike in insurance costs, among other factors led to a major postponement of purchase decisions, and weakening of the customer sentiment. FADA further stated that the inventory levels across most categoies as a result are at the highest currently despite a partial correction in the past two months, and back to the same levels as November 2018.

Adding further, Ashish Harsharaj Kale said, "FADA believes, as does the entire auto industry that the dip in demand is temporary and India will continue to be amongst the fastest growing auto markets in the world. Having said that, navigating smoothly out of the current slowdown is the need and the entire Auto ecosystem, including dealers, will have to and already are in a cost regulation mode, till the industry returns to vibrancy."

FADA further urged OEMs to tke a realistic stock of the current retail situation and recalibrate their production to regulate dealer invoicing over the next two months to bring stock normalcy to dealerships, in a bid to maintain a sustainable business environment. Dealerships will be looking to urgently introduce their inventory in March and April.