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February PV retail sales fall 8%; 2-wheeler inventory alarming

Two-wheeler sales declined to 11,25,405 units last month against 12,22,883 units in year-ago period

New Delhi: Automobile dealers' body FADA Wednesday said retail sales of passenger vehicles (PV) in February declined by 8.25 per cent to 2,15,276 units as compared to the same period last year, hit by lower offtake by end customers.

According to Federation of Automobile Dealers Associations (FADA), PV sales stood at 2,34,632 units in February 2018. Two-wheeler sales declined by 7.97 per cent to 11,25,405 units last month as compared with 12,22,883 units in year-ago period.

"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 retail during this financial year," FADA President Ashish Harsharaj Kale said in a statement.

Domestic auto sales are experiencing a prolonged slowdown as it is already been six months of downturn with no positive triggers visible in near term, he added.

"Starting with the huge hike in insurance costs in September, we have seen a lot of negative factors come together in the past few months, leading to major postponement in purchase decisions and overall weakening of consumer sentiment," Kale said.

Auto dealers across the country are in a high stock situation across all categories and inventory levels of passenger and commercial vehicles, which had seen partial correction in the past two months, but are now back to the unsustainable levels seen in November 2018, he added.

"FADA has been highlighting the high level of inventory amongst the two-wheeler dealers and would like to express serious concern that it has now reached alarming proportions and in some geographies has breached the unheard level of 100 days of stock," Kale said.

Dealers are already facing a substantial increase in operational costs in recent times due to various factors as well as increased working capital needs, and would be urgently looking to reduce their inventory in the months of March and April, he added. Retail sales of commercial vehicle during last month declined by 7.08 per cent to 61,134 units as compared with 65,789 units in February 2018. Three-wheeler sales also declined by 10.32 per cent in February at 50,263 units, as compared with 56,045 units in the year-ago period. Total automobile sales during February declined by 8.06 per cent to 14,52,078 units as compared with 15,79,349 units in February 2018.

Last week, the Society of Indian Automobile Manufacturers (SIAM) had reported 1.11 per cent drop in wholesale PV sales in February.

It was the seventh decline in PV sales in last eight months. The continued spell of weak sales has prompted the auto industry body to suggest that passenger vehicles will miss even the scaled down forecast of 6 per cent for the ongoing fiscal.

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