Nikunj Sanghi, director at the Federation of Automobile Dealers Association (FADA), said the actual slowdown in sales started before it was getting reported since the second half of last year
Auto component makers and dealers on Friday made a strong case for reporting retail sales numbers instead of wholesale despatches, stating that the move will help suppliers align their production with the actual demand.
Automakers in India report despatches from factories to dealers and not the retail sales to customers, which many believe is a faulty method of calculating growth, given that in many months, stocks remain unsold at dealerships. In most of the developed nations, manufacturers report retail numbers.
Dealers and component makers at the annual conclave of the Automotive Component Manufacturers Association of India (Acma) said it would have been easier to predict the ongoing slowdown in auto sales if retail numbers were reported.
Nikunj Sanghi, director at the Federation of Automobile Dealers Association (FADA), said the actual slowdown in sales started before it was getting reported since the second half of last year. “Despite the slump in demand, manufacturers continued to push stock which made inventory management difficult for dealers. Since the wholesale numbers showed a growth, suppliers could not manage their production.”
Since December last year, FADA has been providing retail sales figures but those only cover about 70% of total sales in the country. Besides, retail numbers of individual manufacturers are not reported.
Pawan Goenka, managing director at Mahindra & Mahindra (M&M), agreed to the proposal and said he has asked Siam to consult with other manufacturers on reporting retail numbers. “The Siam president has been asked to talk to other OEMs and I hope they come out with a decision soon,” Goenka said.
Auto sales across segments have been falling since the second half the last fiscal impacted by high prices, costlier finance and other regulatory changes. Vehicles sales fell 20% year-on-year (y-o-y) in August. Poor festive demand in 2018 due to increase in insurance premium and limited finance options piled up excess stocks, as manufacturers continued to dispatch in anticipation of higher demand.
Despite production cuts, dealers of most manufacturers are sitting on a higher-than-normal inventory, while factory stockyards are also short of space. To align wholesale with retail, all manufacturers have been temporarily halting production and laying off workers to keep costs in check.