Retail auto sales drop 55% in May as COVID-19 ends vehicle registrations

New Delhi: Retail auto sales in the country fell 55% in May from April of this year, as lockdowns in various states amid the second wave of the coronavirus pandemic hit vehicle registrations, the Federation of Automobile Dealers Associations (FADA) body of automobile dealers said Thursday.

All segments were hit last month as showrooms in various states were forced to close shutters amid restrictions caused by the pandemic. Total registrations in all categories in May fell to 535,855 units from 11,855,374 units in April of this year.

Retail sales of passenger vehicles (PV) in May were down 59% to 85,733 units from April, as COVID-19-related disruptions in states hit levies, the FADA.

According to FADA, which collected vehicle registration data from 1,294 of 1,497 regional transport offices (RTOs), sales of photovoltaic panels fell 59% to 85,733 units in May, from 208,883 units. in April of this year.

Sales of two-wheelers also fell 53% to 410,757 units last month, from 865,134 units in April.

Likewise, sales of commercial vehicles fell 66% to 17,534 units last month, from 51,436 units in April.

Three-wheeler sales were down 76% to 5,215 units last month, from 21,636 units in April this year, while tractor sales were down 57% to 16,616 units in the month. last, against 38,285 units in April.

“The second wave of COVID-19 has devastated the whole country because there may not be a single household that has not been affected. Apart from urban markets, this time even rural areas have been hit hard. May saw continued lockdowns in most states, ”noted FADA President Vinkesh Gulati.

He added that the auto retail fraternity was in urgent need of support amid the business disruption due to the coronavirus pandemic.

“While a handful of original equipment manufacturers (OEMs) Tata Motors (CV unit), Renault, Bharat Benz and HMSI have announced financial support to their distribution partners, others have not yet done so. Therefore, FADA humbly asks all OEMs who have yet to announce financial assistance to please do so urgently, ”said Gulati.

He also called on the government that instead of restructuring, banks should allow a 90-day moratorium on all categories of dealers without maintaining a turnover limit.

“This is necessary because the automotive retail business operates on the principle that dealers are funded by financial institutions in terms of financing inventory for a period of 30-45 days (depending on the bank) to purchase vehicles from manufacturers. automobiles, ”Gulati noted.

He said that since the current lockdown has already lasted well over 30 to 45 days and is still going on in South India, most dealers’ incomes have been affected due to minimal sales.

“For this reason, the dealers will not be able to repay the payment of their portion of the loan that is due. This will ultimately lead to a fault. In the absence of guidelines, the extension of the tranche is considered a restructuring of the loan. This will ultimately have a negative impact on the credit rating of the dealers, as their CIBIL rating will be affected, ”said Gulati.

Regarding the sales outlook, he noted that FADA remains cautious in its optimism about the overall recovery of the industry during the current fiscal year.

In the short term, normal and evenly distributed rains could provide an early respite to the rural economy, pushing demand for vehicles faster than expected, Gulati said.

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