FADA appeals for govt support as car registrations drop by 87% in May, demand remains weak

With an assumption of no further lockdown and continued reopening measures, there will be substantial pick up in Auto Retails in comparison to May, but the overall outlook continues to be grim.

By:Updated: Jun 11, 2020 5:46 PM
fada, car salesImage for representational purpose (Reuters)

The Federation of Automobile Dealers Associations (FADA)today released the data for monthly vehicle registration for the month of May 2020 revealing an unprecedented decline of 88.87 percent in total vehicle registrations. Of total registration, two-wheelers registered a decline of 88.8 percent, three-wheeler registrations dropped by 96.34 percent, commercial vehicles – 96.63 percent, passenger vehicles – 86.97 percent, and tractors – 75.58 percent. The association says that the demand trend in first the 10 days of June shows extremely weak consumer sentiment.

Statement from FADA President Ashish Harsharaj Kale:

For the first time in history, the month of April witnessed Zero Retails. While lockdown was gradually relaxed beginning May, Auto Dealerships and workshops open for the first time after 40 days in many cities. At the end of May, out of 26,500 outlets about 60% showrooms and 80% workshops were operational across the country. May registrations are hence not indicative of the demand situation as the Lockdown still continued in many parts.

First 10 days of June witnesses extremely low demand despite most dealerships which are now open for business. Weak consumer confidence especially in urban areas continues to haunt as customers stay away from concluding their purchase due to threat of community spread and return of complete lockdown persists.

fada car sales bike sales

With 7.6% of GDP, a workforce of several million and a multiplier effect for many supporting sectors, Auto Industry can be the driving force in boosting consumer confidence and improving sentiment, if supported with short term stimulus to revive demand as a return to normalcy seems very difficult till the festive season.

Also read: How car rental could be your new safety move against COVID-19 after lockdown

Mobility still being a necessity and not a luxury in a growing country like ours, demand stimulus along with credit support can bring Auto Sales back in a positive zone within 30-60 days and help shore up consumer confidence.

FADA also states that with no direct support as a business community, except for the moratorium extension given to all businesses, the Dealership Community looks forward to an early recognition as an MSME to avail government support for the survival and for its 40 lakh workforce.

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