Many cars sold don’t hit roads for this reason; auto slowdown deeper than it looks

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Updated: Nov 07, 2019 12:46 PM

While more than two lakh passenger vehicles were sold to dealers in September 2019, only around 1.5 lakhs touched the roads.

car sales, fada, siam, car sales, auto slowdown, economic slowdown, auto sector, auto industryThe auto slowdown in India is worrisome but the actual numbers are more terrifying. (Bloomberg image)

Customers are not buying as many cars as automobile companies are selling. There is a marked difference in the number of cars sold by companies, and the number of cars that actually hit the roads. While automobile companies sold over 2.2 lakh passenger vehicles in September 2019, only around 1.5 lakh hit the roads. Confused? The difference is arising due to two separate computations of car sales in India by automobile bodies SIAM and FADA. While SIAM (Society of Indian Automobile Manufacturers) reports the number of cars sold by automobile companies to dealers; FADA (Federation of Automobile Dealers Association) counts the number of cars bought by end customers.

To eliminate the discrepancy in data and to get a clearer picture of the industry, FADA president Ashish Harsharaj Kale has written a letter to SIAM president Rajan Wadhera requesting to shift to Market Share Calculation by way of actual registrations. This data is found on the Vahan portal of the Ministry of Road Transport & Highways in detail. He said this is also a norm followed internationally and is a much needed change for the betterment of the Indian auto industry.

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The letter also said that both dealers and component manufacturers felt that it would have been easier to predict the ongoing auto slowdown if retail numbers, instead of wholesale numbers, were reported, as this would have helped in their inventory management and would have kept all better placed in facing these dynamic times.

The auto slowdown in India is worrisome but the actual numbers are more terrifying. However, on the positive side, Ashish Harsharaj Kale said that due to higher savings by the companies after cut in corporate tax, there will be a greater outflow in promotional offers and marketing spends resulting in some positivity in the market

Auto registration in September fell to a new low and continued to reflect weakness in customer sentiment even with the onset of festival season and heavy discounts. Continuance of heavy monsoons and complete Shraddh period within the month also contributed to subdued retails.

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