Auto dealers unsure of a revival in consumer sentiment in festive season

Despite the government announcing a number of sops, auto dealers are unsure of a revival in consumer sentiment in the upcoming festive season.

“On the ground, I can’t say right now if I have seen much change from what we last reported. Enquiries are still there, but postponement continues as of now,” said Federation of Automobile Dealers Associations (FADA) President Ashish Harsharaj Kale. 

He was responding to queries on whether the measures announced by finance minister Nirmala Sitharaman to help the auto industry has had any tangible effect. 

A slump during the festive season would eliminate any chance of revival of the auto sector this financial year. This is because sales of automobiles during the festive season comprise almost a third of the total vehicles sold during a particular year. 

The muted expectation of dealers come at a time when vehicle manufacturers such as Maruti Suzuki India, Hyundai Motor India, Mahindra & Mahindra and others reported a double-digit fall in wholesale dispatches to dealerships in July and August. This comes with the festive season kicking off with Ganesh Chaturthi and Onam.

Maruti’s domestic dealer sales in August declined significantly by 35.9 per cent year-on-year to 94,728 units.

This is the third time the company pushed less than 1,00,000 vehicles to its dealerships in a particular month since July 2017. Vehicles dispatched by the top six passenger vehicle manufacturers during the same period declined by 34 per cent year on year to 171,193 vehicles.

Maruti, which has 50 per cent share of India’s car market, is not pushing any stock to its dealers which is unusual before the festive season. “We aren’t pushing any stock to the dealership in order to rationalise the inventory,” said Kenichi Ayukawa, managing director and chief executive officer of Maruti Suzuki India.

According to data released by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales in July fell significantly by 31 per cent to 200,790 vehicles. It was the worst sales performance since a 35 per cent decline in December 2000.

However, the credit availability to auto dealers have significantly improved after dealers met bank representatives. “They are now more inclined to do a case-by-case evaluation of the dealer rather than tightening the norms for everyone,” said Kale.

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