The Federation of Automobile Dealers Associations today released its monthly figures for new registrations of vehicles and the numbers tell a grim story. New registrations for passenger cars were down by 2 per cent in April 2019 while two-wheelers took a massive hit de-growing by 9 per cent. FADA President, Ashish Harsharaj Kale said, “The month of April ended on a negative note. Amongst the categories on a YoY basis, commercial vehicles and three-wheelers, which registered highest growth during FY’19 witnessed highest fall in the month of April, while 2W and PV de-grew -9% and -2% respectively.”
On a year-on-year basis, there was de-growth in all the categories as April 2018 had a very high base. The only positive and that too on a month on month basis was shown by the CV category which grew by 2 per cent. The current negative retail situation is expected to continue for the next 8-12 weeks. However, inventory levels continue to remain high and requires further correction than done in recent months.
Looking at the overall de-growth in volumes, weak consumer sentiment, uncertainty in the market and entering into a year which will witness BS6 implementation impacting the dynamics of the industry, FADA will be strongly advocating for a leaner dealer inventory of 21 days (15 days Inventory + 7 days of In-Transit Inventory) for its members thus helping in reducing a huge cost burden.
Faced with an unusually high number of dealership closures in recent times, especially in Metro and Tier 1 Cities, a substantial number of which were due to financial stress caused by accumulated losses and reduced access to working capital needs. FADA will be engaging with newly elected policy makers of the country along with the Reserve Bank of India to work upon a separate categorisation for auto retail and its funding requirements for long term sustainability of dealers.