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Auto retail in November declined by 19% even as sales gap to previous year continues to narrow

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Auto retail in November declined by 19% even as sales gap to previous year continues to narrow 2

Mumbai: Vehicle registrations declined by over 19% during November led by a decline in the sale of two-wheelers, resulting in high inventory with retailers, according to a statement by a lobby of vehicle dealers.

Vehicle registrations at regional transport offices (RTOs), which are a proxy for automobile retail, declined by 19.3% year-on-year in the month of November. It was led by a 21.4% decline in two-wheeler registrations, which account for four out of every five vehicles sold in India.

The year-on-year decline however continued to narrow compared to preceding months. Registrations had declined by 24% in October. The data were compiled by the Federation of Automobile Dealers’ Associations (FADA) from the VAHAN portal of the road transport and highways ministry.

Subsequently, vehicle dealers had between 45-50 days’ worth of inventory on average against the industry norm of 30 days, FADA said in a statement.

The sale of passenger vehicles and tractors remained in the positive territory in November as registrations grew by 4.2% and 8.5% on-year, respectively. Passenger vehicle or car inventory with dealers averaged around 25-30 days, in line with the industry norm.

Commercial vehicle and three-wheeler registrations were down by 31.2% and 65% compared to last year as both the segments continued to reel from the economic impact of the coronavirus pandemic.

“Automobile Industry has seen one of the best recovery rates since unlocking began as November continues to see positive momentum by growing 29.32% on M-o-M basis. On a Y-o-Y basis, the negative slide continues with de-growth of 19.3%,” said FADA President Vinkesh Gulati.

To be sure, the data represent only 1,265 out of 1,472 RTOs in the country as some states and union territories are yet to migrate to the VAHAN system.

The high inventory with two-wheeler dealers resulted due to lower-than-expected sales during the Navratri-Diwali festive season when automakers usually build inventory in their channels in the anticipation of higher sales.

The registrations of two-wheelers were down by 6.3% y-o-y during the 42-day period from 17 October to 28 November when compared to the similar festive window last year. Registrations of passenger vehicles grew by 13.6% during the same period.

Overall vehicle registrations during this period de-grew by 4.7%.

“While registrations during Navratri were tepid, people came out in good numbers to purchase their dream vehicles during the Dhanteras-Diwali period,” Gulati said.

“Tractor segment continued to gallop ahead. The fear of pandemic leading to safer means of travel for the entire family saw good sales in Passenger vehicles as it grew in double digits at 13.6%.”

In the commercial vehicles segment, small goods carriers continued to sell in good numbers but demand for passenger vehicles like big and small buses remained weak as people remain wary of using public transport. Sales of three-wheelers, too, have declined for the same reason.

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