retail sales of automobiles plunged for the month of May 2021 with sales
falling by as much as (-) 55 per cent on month on month (MoM) basis. The
industry witnessed a bloodbath, claimed the Federation of Automobile Dealers
sales of all categories of vehicles fell by a huge degree with two wheelers
falling by -53%, three wheelers by -76%, passenger vehicles by-59%, tractors by
-57% and commercial vehicles by -66% respectively.
was revealed in the FADA monthly vehicle retail data for May 2021. Unlike other
months, FADA could not represent a year on year (YoY) comparison since India
was under complete lockdown in May 2020. Hence, all comparisons for the month of May 2021 have been done with
April’21 (MoM) and 2 year back with May 2019.
President Vinkesh Gulati noted, “The 2nd
wave of covid has left the entire country devastated as there may not be a
single household which did not get affected. Apart from urban markets, this
time, even rural areas were badly hit. May saw continued lockdown in most of
a handful of OEMs (Tata Motors – CV, Renault, Bharat Benz and HMSI) have
announced financial help to their channel partners, others are yet to do so.
Hence, FADA humbly requests all those OEMs which have still not announced any
financial assistance to kindly do it urgently,” he added.
also appealed to the Prime Minister that instead of restructuring, banks should
allow a moratorium of 90 days to all categories of dealers without keeping a
turnover limit. This is required as Auto Retail Trade works on the principle
where dealers get funded from financial institutes in terms of inventory
funding for a period of 30-45 days (depending from bank to bank) to purchase
vehicles from Auto OEMs.
the current lockdown has already lasted well over 30-45 days and is still
continuing in South India, revenue for most of the dealers are negligible as
there was minimal sales. Due to this, dealers will not be able to repay their
loan tranche payment which is getting due. This will ultimately lead to default.
Since there are no guidelines, extension of tranche is considered as
restructuring of loan. This will ultimately have a negative impact on dealers
credit score as their CIBIL rating will get impacted, FADA cautioned.
Near Term Outlook
1st nine days of June have seen better than expected retails due to pent up
demand which was there in the system when states started implementing lockdown.
If the trend continues, FADA hopes almost similar sales when compared to
June’20 last year.
Vehicle Retail Data for May’21
% Change w.r.t MAY'19