NEW DELHI: Owing to factors such as rising oil prices, a liquidity crunch in NBFC sector and higher insurance costs, this year’s festival season proved to be one of the dullest in recent times for automakers, as domestic automobile retail sales during the period declined by 11 per cent. According to the Federation of Automobile Dealers Associations (FADA), total registrations during the 42-day festival period (October 10-November 20, 2018), stood at 20,49,391 units. Last year, when the festival period was between September 21 and November 1, the industry witnessed the total registrations of 23,01,986 units.
“We have not seen such a dull festive season in the past few years as many negative factors came into play during this season, which weakened the consumer sentiments and postponed their purchase decisions. It is a matter of deep concern for our dealership community,” said FADA president Ashish Harsharaj Kale.
The fall in auto sales was primarily led by weak demand for passenger vehicles (PVs) and two-wheelers. PV registrations in this year’s festival period declined by 14 per cent to 2,87,717 units as against 3,33,456 units in the corresponding period last year, while two-wheeler registrations fell by 13 per cent to 15,83,276 units.
Dealer inventory levels in both these segments have risen substantially and is a matter of great concern, FADA said. The inventory levels before the festivals began, were at around 60 days and 50 days for two-wheelers and passenger vehicles respectively, and the same merely came down to around 50 and 45 days post the festive season.
According to FADA, the ongoing NBFC liquidity crisis is a concern for the industry, especially for the two-wheeler and commercial vehicle segments. It hopes that with the recent liquidity measures taken by the RBI and the government, auto NBFCs and banks would be better placed to continue their strong support to auto retails. Growth percentage for commercial vehicles slowed to 16 per cent during the period.FADA, however, is hopeful of delivering a positive growth in the remaining five months of the financial year, as the agriculture produces are now coming to the markets and fuel prices are dropping substantially.