Auto retail sales grow 11.45% month-on-month in Sept

Vehicle registrations in September grew 11.45 per cent on a month-on-month (MoM) basis, but fell 10.24 per cent on a year-on-year (YoY) basis, the Federation of Automobile Dealers Associations (FADA) said on Thursday.

Also read: Three-wheeler segment hit by Covid impact, low demand

Two-wheeler retail sales fell 12.62 per cent YoY, while three-wheelers declined 59 per cent and commercial vehicles (CV), around 34 per cent, said FADA.

Passenger vehicle (PV) sales showed growth for the first time since the easing of lockdown rules, rising around 10 per cent MoM in September.

“With the government’s persistent effort to unlock India, September continued to witness a rise in automobile registrations compared to the previous months. Product launches and vehicle availability played their part as catalysts. A lower base during the previous financial year also helped the cause,” said FADA President Vinkesh Gulati.

Growth drivers

The need for social distancing, governmental efforts to normalise business conditions and banks’ increasing willingness to finance vehicle purchases helped boost demand for entry-level PVs, Gulati added.

Also read: FADA claims stocks building up, car-makers say no

Tractor registrations also continued to go up, with 80.39 per cent YoY growth, FADA said. In the near term, it added, the government’s move to waive interest-on-interest on the moratorium of loans up to ₹2 crore will improve sentiment and encourage vehicle purchases during the festival season.

As banks and NBFCs roll out festival offers to woo retail customers, auto sales are expected to witness more growth and close at last year’s levels. PVs and two-wheelers are expected to lead the way.

FADA cautioned that with the festival season and Bihar elections round the corner, the risk of a Covid resurgence may play spoilsport in specific regions.

The inventory for two-wheelers stands at 45-50 days and for PVs at 35-40 days. Any dampening of sales going ahead will affect the financial health of dealers, it added.

“FADA advises manufacturers and dealers to avoid building any further inventory as this may lead to a disastrous situation similar to the last two festival seasons, when sales were below the mark,” it said.

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