Shock decline in vehicle sales hit dealers this Diwali

MUMBAI: An "unexpected de-growth" during the festival season this year has shocked the automobile industry with consumers "postponing" purchase of both two and four-wheelers, a top industry official said here on Friday. During the festival season Navratri to Diwali, the Federation of Automobile Dealers Association (FADA) recorded a dismal decline in sales of two-wheelers and four-wheelers, barring three-wheelers like commercial vehicles and autorickshaws.

In fact, this is the first time in the past five years or so that FADA has notched a negative growth during the auspicious festival season of around 42 days, when thousands flock to book or purchase vehicles.

"We had not witnessed such a dull festival season... Many negative factors came into play during this season. It`s a matter of deep concern for the dealership community," FADA President Ashish H. Kale told IANS.

According to Kale, four-wheelers or passengers vehicles recorded a steep decline of 14 per cent in the prime time between September 21-November 20 this year, compared to the same period in 2017.

This came to actual sales of 287,717 passenger vehicles this season, down from last (2017) season`s 333,456, he said.

In the two-wheelers segment, the decline was equally sharp at 13 per cent during the same period, recording 15,83,276 two-wheelers sold compared to 18,11,703 last season, Kale said.

Incidentally, four-wheelers have notched an overall decline of 1.4 per cent from April to November this year, or 16,26,555 passenger vehicles sold compared to 16,49,650 sold during the same period in 2017.

The only silver lining for FADA was the 10 per cent growth in the three-wheelers and commercial vehicles categories.

For three-wheelers, the sales figure this year was 58,801 (53,457 last year) and commercial vehicles it was 119,597 (103,370 last year).

"Dealer inventory in the two and four-wheelers has risen substantially due to this and is a matter of great concern for us," Kale said, of the FADA`s move to release independent figures for the first time in view of the grim situation.

The "negative factors" which slashed sales this year include the fuel prices which were on the upward swing till October-end, and although the petrol-diesel prices started going downwards, the damage was done.

Adding to the negative sentiments was the ongoing Non-Banking Financial Companies (NBFC) liquidity issue which hit buyers, especially those opting for two-wheelers and commercial vehicles.

Kale hoped that the recent liquidity measures initiated by the Reserve Bank of India (RBI) and the government, the banks and automobile NBFCs would help the automobile industry grow in the days ahead.

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"We request the government and RBI to further ease the liquidity for auto NBFCs which operated in a less riskier business environment compared to infrastructure and housing NBFCs due to short repayment cycle and mobility of the assets," Kale said.

On the positive side, he said that customer enquiries did not fall this festival, but they failed to materialise into transactions on expected lines due to "postponement" of decisions, and is optimistic the trend could reverse in the next four months.