Retail demand for cars and SUVs is positive from September to November 19

Chennai: With great discounts, especially for BS4 models, retail sales of cars and SUVs have shown an increase for three consecutive months. According to the Vahan vehicle registration data shared by the government, passenger vehicle registrations increased 6.25% in November, 14% in October and 8% in September (see chart). This three-month sales increase in jogging occurs after five months of continuous sales decline (see chart). The Federation of Automobile Dealers Associations (FADA), the industry's leading agency for car dealers, says December should also see positive retail numbers for passenger vehicles, although the bloodbath continues for the truck and bus segment.

“In December, distributors expect a small increase in sales. In October there was a positive retail sale due to the demand of the festival, in November the trend continued as the discounts continued and in December there should also be a certain rebound. Inventory levels are now very normal at 4 weeks across the country and around 3 weeks in some markets and the liquidity situation is also improving with banks increasing their working capital and other financing, said FADA president , Ashish Harsharaj Kale. What has helped the situation, he added, are the production cuts planned by the auto companies in the period prior to the BS6 change.

What is happening is less a change than bottoming out with the numbers of passenger vehicles that look stronger month by month. The used car trade has also been quite active, which is another indicator, ”explained Kumar Kandaswami, partner, Deloitte.

Used car dealers agree that the sector has had a strong demand and supply until the 2019 calendar. We expected a slightly smoother December compared to October and November, but used vehicle sales remain strong said Droom founder and CEO Sandeep Aggarwal. The Droom online market, he said, sold used vehicles worth Rs.636 million in October and Rs 604 million in November and seeks to close December with around Rs 625 million.

The total market for passenger vehicles (used and new) is currently 9 million strong units (uses 5 million units, new 4 million units) and has a value of $ 77 billion (new $ 39 billion) and used $ 38 billion).

However, car financiers say that retail sales of some OEMs in December could be affected by production cuts taken to clean up BS4 stocks. “December has had some supply problems with some OEMs that have been discontinuing their BS4 models. The aggressive discount means that customers are interested, but in many markets they don't get the model, variant, color or powertrain of their choice, ”said Vyomesh Kapasi, MD, Kotak Mahindra Prime.