Auto retail sales drop 55% in May as COVID puts brake on vehicle registrations: FADA

FADA reports fall in auto-sales in May

According to automobile dealers’ body FADA, amidst the pandemic second wave, automobile retail sales in the country as compared to April 2021 declined by 55% in May 2021 because lockdowns in various states affected the vehicle registrations.

Because of the pandemic-led curbs showrooms across various states, showrooms were mandatorily shut. In April this year, there was a total of 11,85,374 unit registrations across categories, while this dropped drastically to 5,35,855 units in May.Auto retail sales drop 55% in May as COVID puts brake on vehicle registrations: FADA According to automobile dealers’ body FADA, amidst the pandemic second wave, automobile retail sales in the country as compared to April 2021, declined by 55% in May 2021 because lockdowns in various states affected the vehicle registrations. Because of the pandemic-led curbs showrooms across various states, showrooms were mandatorily shut. In April this year, there was a total of 11,85,374 unit registrations across categories while this dropped drastically to 5,35,855 units in May. The vehicle registration data that was collected by the FADA, from 1,294 out of the 1,497 regional transport offices (RTOs), showed that as compared to the 2,08,883 units in April, there was a decline in passenger vehicle by 59% in May this year, while two-wheeler vehicle sales also declined by 53%, dropping from 8,65,134 units in April to 4,10,757 units in May. There was also a drop in the sales of commercial vehicles (by 66%), three-wheeler vehicles (by 76%), tractors (by 57%). According to FADA President Vinkesh Gulati, the auto retail fraternity is in dreadful need of support amid business disordering caused by the pandemic. FADA has humbly requested all the OEMs to announce any financial assistance to their channel partners. Vinkesh Gulati also appealed to the government that rather than restructuring, banks should allow a suspension of 90 days to all types of dealers without keeping a turnover limit, it is needed as auto retail trade works on the principle where dealers get capitalized from financial institutions in terms of inventory financing for 30-45 days to buy vehicles from auto OEMs. He also said that due to the lockdown already lasting over 30-45 days and will continue in south India, the revenue of dealers was impacted because of minimum sales, and due to that dealers will not be able to pay back their due loan installment which would lead to default. And This will ultimately harm dealers’ credit score. The FADA remains positive that there will be an improvement soon from the sales point of view and good a monsoon period can bring an increase in vehicle demand by providing early relief to the rural economy.

The vehicle registration data that was collected by the FADA, from 1,294 out of the 1,497 regional transport offices (RTOs), showed that as compared to the 2,08,883 units in April, there was a decline in passenger vehicle by 59% in May this year, while two-wheeler vehicle sales also declined by 53%, dropping from  8,65,134 units in April to 4,10,757 units in May. 

There was also a drop in the sales of commercial vehicles (by 66%), three-wheeler vehicles (by 76%), tractors (by 57%).

According to FADA President Vinkesh Gulati, the auto retail fraternity is in dreadful need of support amid business disordering caused by the pandemic. FADA has humbly requested all the OEMs to announce any financial assistance to their channel partners.

Venkatesh Gulati also appealed to the government that rather than restructuring, banks should allow a suspension of 90 days to all types of dealers without keeping a turnover limit, it is needed as auto retail trade works on the principle where dealers get capitalized from financial institutions in terms of inventory financing for 30-45 days to buy vehicles from auto OEMs.

He also said that due to the lockdown already lasting over 30-45 days and will continue in south India, the revenue of dealers was impacted because of minimum sales, and due to that, dealers will not be able to pay back their due loan instalment which would lead to default. And This will ultimately harm dealers’ credit score. 

The FADA remains positive that there will be an improvement soon from the sales point of view, and good a monsoon period can bring an increase in vehicle demand by providing early relief to the rural economy.

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