Auto retail gross sales drop 55% in May as COVID places brake on automobile registrations: FADA

Automobile retail gross sales within the nation declined by 55 per cent in May as in comparison with April this yr as lockdowns throughout numerous states amid second wave of the coronavirus pandemic hit automobile registrations, vehicle sellers’ physique FADA mentioned on Thursday.
All the segments had been hit final month as showrooms throughout numerous states had been pressured to down shutters amid the pandemic led restrictions. Total registrations throughout classes in May dropped to five,35,855 items as in comparison with 11,85,374 items in April this yr.
According to the Federation of Automobile Dealers Associations (FADA), which collected automobile registration information from 1,294 out of the 1,497 regional transport workplaces (RTOs), passenger automobile (PV) gross sales declined by 59 per cent in May as in contrast with 2,08,883 items in April this yr.
Two-wheeler gross sales additionally witnessed a decline of 53 per cent at 4,10,757 items final month, as in comparison with 8,65,134 items in April.

Similarly, industrial automobile gross sales dropped by 66 per cent to 17,534 items final month, as in opposition to 51,436 items in April.
Three-wheeler gross sales noticed a decline of 76 per cent to five,215 items final month, from 21,636 items in April this yr whereas tractor gross sales witnessed a dip 57 per cent to 16,616 items final month, in opposition to 38,285 items in April.
“The second 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 the states,” FADA President Vinkesh Gulati famous.
He added that the auto retail fraternity is in dire want of help amidst enterprise disruptions as a result of coronavirus pandemic.
“While a handful of original equipment manufacturers (OEMs) — Tata Motors (CV unit), 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,” Gulati mentioned.
He additionally appealed to the federal government that as a substitute of restructuring, banks ought to permit a moratorium of 90 days to all classes of sellers with out retaining a turnover restrict.
“This is required as auto retail trade works on the principle where dealers get funded from financial institutions in terms of inventory funding for a period of 30-45 days (depending from bank to bank) to purchase vehicles from auto OEMs,” Gulati famous.
He mentioned that for the reason that present lockdown has already lasted effectively over 30-45 days and continues to be persevering with in South India, revenues of many of the sellers had been hit as a result of minimal gross sales.
“Due to this, dealers will not be able to repay their loan tranche payment which is due. This will ultimately lead towards 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,” Gulati mentioned.

On gross sales outlook, he famous that FADA continues to stay guarded in its optimism on total business restoration within the present fiscal.
In the close to time period, regular and evenly unfold rains might convey an early respite for the agricultural economic system thus pushing demand for automobiles quicker than anticipated, Gulati mentioned.