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Vehicle retail sales nosedive in December in spite of discounts

The number of registrations at RTOs came down by 15% in December as compared to a year ago.

, ET Bureau|
Last Updated: Jan 22, 2020, 07.32 AM IST
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MUMBAI: Retail sales of automobiles fell sharply in December after two consecutive months of growth, despite discounts and offers in the market.

The number of registrations of vehicles at regional transport offices (RTOs), which is a proxy for retail sales, slid 15% in December from a year ago. The decline was on an already low base since the ongoing sales slowdown had already started showing its effects by December 2018.

Registrations declined for all categories of vehicles except three-wheelers, which improved marginally. The data was sourced from the road transport and highways ministry’s VAHAN platform and collated by the federation of automobile dealers’ associations (FADA), a retailers' lobby body.

The sales decline was unexpected, vehicle retailers said, since inquiries from customers were high throughout the month. Discounts and offers also continued to remain high in December as automakers looked to liquidate existing stock near the year-end before New Year model rolled in.


“Consumer sentiment continues to be very weak as customers did not conclude on the purchase even after taking the efforts of inquiring and despite the best offers being available,” said FADA President Ashish Kale.

The Indian auto industry is gearing for a regulation change from April 2020 when BS-VI emission norms kick in. Vehicles of older make cannot be sold after 31 March this year and a sales decline so close to the deadline raises concerns for automakers and dealers who look to clear all their inventory of BS-IV norms compliant vehicles.

“The sharp decline in growth has denied the dealer community an opportunity to reduce its BS-IV inventory making the transition to BS-VI trickier,” Kale said.

Production cuts from manufacturers, however, ensured that the inventory with dealers reduced slightly by the end of December.

Average inventory with commercial vehicles and two wheelers dealers came down to between 30 and 35 days equivalent compared to 35 and 40 days a month prior. Inventory with passenger vehicles dealers, meanwhile, reduced to an average between 20 and 25 days from 25 and 30 days earlier, FADA data showed.
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