Indian automotive industry is on the road to recovery
This stabilisation in sales has been chalked up to the slew of discounts and benefits most automakers in India have announced in the recent past.
After battling a nearly year-long decline in sales, looks like things in the country’s automotive industry are finally starting to look up. IANS, quoting a recent report by Motilal Oswal Institutional Equities, noted that sales are finally starting to exhibit signs of stabilising and not across a sector or two, but across all of them. And what would one ascribe this stablisation to, then? Well, according to the aforementioned Motilal Oswal Institutional Equities report, that would be because of a handful of factors, including massive discounts, improved finance options, and better rural sentiment.
But let’s not get our hopes up just yet, because the industry still has to contend with the transition to BS 6. And with the deadline for the new emission norms in India round the corner, this recovery isn’t exactly expected to pick up pace just yet. Even though market demand has decidedly improved and inventory in the industry also seems to be finally contained, the impending transition to BS 6 emission norms may mean the industry’s return to health may not be completely seamless.
And while we are at the topic, we must mention that FADA (Federation of Automobile Dealers Associations) had recently petitioned the Supreme Court of India to allow sales and registration of BS 4 vehicles even after April 2020. The agency noted that several of its members may not be able to sell off all of their BS 4 vehicles before the deadline for the new emission norms, i.e. 1 April, 2020. This, FADA explained, would then result in severe financial issues for automobile dealerships in India, even putting the viability of their businesses at risk.
According to FADA’s figures, the average inventory for passenger four wheelers in November 2019 ranged between 25 and 30 days and that for two-wheelers was roughly 35 to 45 days. The agency recommends an inventory of 21 days in general.
While the discounts are expected to continue helping, one must not forget that come January 2020, many automakers in India will also hike prices. It will remain interesting to see how that plays out in the industry.
Font: TimesDrive
