Vehicle registration continues to grow in September, down by 10.24% YoY: FADA

8^th October’20, New Delhi: The Federation of Automobile Dealers Associations (FADA) today released the Monthly Vehicle Registration Data for the Month of September’20.

Commenting on how September’20 performed, FADA President, Mr. Vinkesh Gulati said, “With the Government’s persistent effort to unlock India, the month of September continued to witness Automobile Registrations on a rise as compared to previous months.

Passenger Vehicles for the first time saw positive growth coming back on YoY basis. With social distancing on customer’s mind coupled with government’s push to further normalise business conditions and banks becoming more considerate to finance vehicles, entry level passenger vehicles saw good demand thus indicating a preference for personal transportation over public. New Launches & Vehicle availability played their part as catalyst. A lower base during last FY also helped the cause.

Tractor sales continued its dream run as Kharif sowing witnessed record progress of area covered till date when compared to last year. With good Rabi season resulting in good disposable income, rural market also saw its rub off effect on 2-Wheeler, small passenger vehicles and small commercial vehicles. Overall, 2-wheeler, 3-Wheeler, and Commercial Vehicles continued to march ahead on MoM basis and inched up to narrow their gap with last year’s sale even though pre-covid levels are yet to be seen across all categories.

While recently, the economic revival was mostly limited to Rural India and impact of Covid-19 was still felt on larger states and urban centres, the top states which makes up half of India’s economic output (Maharashtra, Tamil Nadu, Uttar Pradesh, Karnataka, Gujarat and West Bengal) are now showing signs of revival as economic activities in these states are at its peak since lockdown began in March. This has also helped in creating a demand for automobile sales.”

The month of October & November brings with itself the much awaited festival season of Navratri, Durga Puja & Diwali. With no more lockdown as announced by the Central Government, FADA anticipates a high growth period during these two months for Automobile Sales in India.

The Government’s consideration to waive off interest on interest during moratorium up to Rs 2 Crores will help in improving customer sentiment thus making them conclude vehicle purchase decision during the festivities.

With Banks and NBFCs also gearing up with various festival offers to woo retail customers, Auto Sales is expected to witness a renewed growth and may close at par with last year. Passenger vehicles and two wheelers are anticipated to lead the way.

As a caveat, with festival season round the corner and elections approaching in Bihar, the risk of Covid spread resurging may play a spoilsport in specific regions. Inventory for 2W stands at 45-50 days and PV stands at 35-40 days. Any dampener in vehicle sales during the upcoming festivals will have a catastrophic impact on Dealers financial health.

FADA thus once again advises extreme caution to both OEMs and the Dealers to avoid building any further inventory as this may lead to a disastrous situation similar to last 2 festive seasons when sales were below the mark.

Chart showing Vehicle Registration Data for September’20 with YoY comparison can be found below:

All India Vehicle Registration Data for September’20

Source: FADA Research