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Vehicle retail registered second-straight month of decline in January

"Auto sales continue to be in the negative territory in the month of January, except for three wheelers, with many consumers still not concluding on their decisions. Ongoing transition of BS-IV to BS-VI is also a factor in delayed purchase decision," FADA President Ashish Harsharaj Kale said in a statement.

, ET Bureau|
Last Updated: Feb 20, 2020, 07.40 PM IST
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MUMBAI: Stock of BS-IV emission norms compliant vehicles with dealerships continued to remain high despite production cuts by manufacturers as retail sales registered a decline for the second consecutive month in January.

Registration of vehicles with the regional transport authorities, which is a proxy for retail, showed a 7.2% decline in January over the preceding year. Two-wheelers and commercial vehicles registered the sharpest declines at 8.8% and 6.9%, respectively.

Subsequently, the inventory with dealers averaged between 25 and 30 days of stock for two-wheelers and commercial vehicles at the end of January. For passenger vehicles, this was between 15 and 20 days. The data were collated by the Federation of Automobile Dealers Associations (FADA), a lobby body of vehicle retailers.

Majority of this inventory was of BS-IV vehicles, said Ashish Kale, president of FADA.

While the inventory level was lower than in December, it raises concern as only BS-VI norms compliant vehicles can be registered in India from April this year and any unsold BS-IV vehicles may have to be written off.

“We are comfortable with the level of inventory at the start of February, but if more BS-IV vehicles are made by manufacturers, it will be a concern for dealers,” Kale told ET. “We have requested the manufacturers that any BS-IV vehicles billed further, which are not against specific customer orders, should be on a returnable basis to avoid financial loss to dealers.”

Kale attributed the decline in sales in January to confusion amongst customers regarding the switchover to BS-VI norms. Many customers were sitting on the fence, he said, weighing their options on whether to buy BS-IV vehicles or to wait for the BS-VI ones.

Buyers looking for diesel-powered vehicles, especially SUVs, were waiting for manufacturers to announce the prices of their BS-VI vehicles before making a decision, Kale said. Many were also delaying their purchase in hopes of steep discounts around March-end, when retailers may be forced to liquidate unsold inventory at a loss.

While passenger and commercial vehicles continued to register a decline, two segments which did well in January were three-wheelers and tractors. Three-wheeler registrations grew by 9.2% during the month, while tractor registrations were up by 5.1%. Data on the inventory levels of these segments were not available.

Tractor sales were particularly high in January as rains were delayed this year, pushing back the agricultural payments cycle and subsequently the purchase of Farm equipment from November-December to January, Kale said.

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