Automobile industry body FADA (Federation of Automobile Dealers Association) on Tuesday released the monthly vehicle registration data for December and found that the retail passenger vehicles sales fell 3% last month from a year ago while the two-wheeler sales rose 11% in the same period.

Sales of passenger cars—the largest segment by volumes—fell to 2,02,585 units in December from 2,08,988 in the corresponding month last year. However, India’s second largest vehicle category, two-wheelers, grew to 11,41,209 units from 10,29,311 in the year-ago period.

According to FADA, the reason for this was liquidity which continued to be a major constraint in December. “Although, a number of initiatives seem to be on the table of our policy makers towards easing the overall situation, positive effects of which will be felt in this quarter,” FADA said in a statement.

“We are seeing initial signs of revival in the industry as compared to the recent festival season. Passenger vehicle sales have arrested further de-growth as good retail momentum in last 15 days indicates sentiment turning positive. Two wheelers continue to show positive growth on a year-on-year basis although month-on-month trend shows decline,” said Ashish Harsharaj Kale, president, FADA.

The car dealers’ association also said that while auto sales are still in choppy waters, initial signs of positive consumer sentiment are visible post the dull festive season. According to FADA, moderation in wholesale billing and some reasonably good retail sales, towards the month end, has helped in reducing the high PV (passenger vehicle) inventory, to reasonable levels in many markets.

FADA suggests that better efforts by OEMs in the PV and CV (commercial vehicle) segment will bring down the inventory levels to normal across all geographies by January end. According to a survey conducted by the association, the current inventory of PVs and CVs ranges from 35-40 days, while two-wheelers range from 55-60 days. The inventory of two-wheeler dealers still continues to be very high and we hope that wholesale billing in January will be moderated as per the monthly retail situation, it said.

Kale feels that the customer interest is still healthy and sales will come back in its previous growth trajectory sooner than later.

“As predicted during festival season data release, healthy customer inquiry level, coupled with stakeholders of the industry coming together and moving ahead in a cohesive manner, the auto industry will once again clock real growth close to double digits by the end of this financial year,” he said.

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