Retail sales of vehicles saw an uptick in October on the back of attractive festive season offers, according to the Federation of Automobile Dealers Associations (FADA).

FADA on Tuesday said that overall vehicle registrations grew by 4% to 1,709,610 units in October, as compared to 1,638,832 in the same period last year. Passenger vehicles showed the biggest growth: 11%. It grew from 223,498 units last year to 248,036. The two-wheeler segment grew 5% year-on-year.

“October retail sales were in the positive, giving a much-needed respite to the auto industry and especially our dealer community after months of de-growth,” said Ashish Harsharaj Kale, president, FADA.

This year, Diwali and Dussehra festivals were in October and the auto industry, reeling under a severe sales slowdown that began sometime last year, had announced deep discounts and other incentives to push inventories. Kale says dealerships across many parts of the country saw high footfall. “The consumer sentiment was positive, and purchase decisions were concluded as [they] used to be during the growth years,” he said.

Kale praised the actions taken by automakers to cut down inventories, which had been at alarming levels for some time. “Although not at FADA recommended levels of 21 days, two-wheeler inventory has reduced from an alarming level. PV (passenger vehicle) inventory, already at reasonable levels, has reduced further,” said Kale.

Inventory levels of commercial vehicles (CV) fell the most: 23% from 87,618 units a year ago to 67,060 units. “CV inventory has also reduced although with retail continuing to be weak, where further wholesale regulation is required to reach FADA’s 21 days recommended levels. Heading into the unknown territory of BS VI transition, more needs to be done towards inventory reduction to avoid dealer losses,” Kale said.

FADA says that with continued liquidity easing, business appetite of banks, and non-banking financial companies (NBFCs) has grown and will surely aid the industry in the path to recovery as consumer sentiment strengthens in the coming days. “Both banks and NBFCs are requested to provide more support for a stronger recovery,” it said in a statement.

In the near term, the association expects the industry to be stable and consumer sentiment to turn positive though it advises its members to be on guard. “FADA continues its recommendation to its members to tread with caution, especially with regards to inventory and costs during this dynamic time of fluctuating consumer sentiment due to overall weak economic situation and BS VI transition,” Kale said.

According to an online survey of its members on their expectations for November, 48% dealers expect sales to be flat, 33% dealers, de-growth, and 19% dealers, growth.

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