Do you remember how Parle G had raised a false alarm saying that it may force to cut some 10,000 jobs due to slow down? What turned out later was that leave alone cutting a single job, the net profit of the company actually rose to 15%. Some analyses have pointed out that the false alarm of slowdown was raised probably to bargain a rate cut in the GST council for the industry. So, any buzz about the slow down needs to be evaluated cautiously. This also applies to the slow down news concerning automobile sales as well.
Since the whole world is thinking about switching from vehicles run on fossil fuel to electric vehicles, besides the younger generation is showing the trend of not interested in owning vehicles, some form of churning bound to happen in a global scale. Nevertheless, notwithstanding the doomsday predictions over Indian automobile sector, the numbers are telling a different story.
Automobile Sale: Wholesale Vs Retail
A few days ago, Pawan K Goenka, Managing Director of Mahindra & Mahindra in a tweet revealed that October recorded the highest recorded monthly retail volume for their company.
Apart from Mahindra and Mahindra, Tata Motors, Honda Cars and Toyota Kirloskar Motor also reported higher car sales in October compared to the same month last year. This increase in retail sales is in spite of a decline in wholesale numbers has triggered a debate on which figure reveals the true picture of automobile sales in India.
The international norm for releasing monthly automobile sales is to reveal the retail sales but in India automobile manufacturers reveal their wholesale figures. According to analyst’s while wholesale figures represent the stock dispatched from manufacturing plants to dealers, retail sales figures reflect actual purchases by buyers and there can often be a mismatch between the two sets of numbers, with wholesale not being a true representation of consumer sentiment.
View of the Automobile Industry
Number of leading automobile industry captains and association are now advocating the release of monthly retail sales instead of wholesale data so as to better understand the market realities.
- Chairman of Maruti Suzuki RC Bhargava opined that wholesale numbers are meaningless and while it was not possible to get accurate retail numbers before, now it is possible and hence retail sales must be reported. October was also the second-best month ever for retail sales at the country’s largest carmaker.
- Anand Mahindra, Chairman of Mahindra Group also tweeted that industry needs to switch to reporting the retail volumes which also helps in maintaining appropriate stock levels. He also added that they have clocked double-digit growth in car sales this year.
- Federation of Automotive Dealers Federation (FADA) the apex body for fifteen thousand auto dealers in the country also pushed for shift to retail data. In a letter it said, vehicle registration data found on the ministry of road transport & highway’s Vahan platform is representative of retail sales and reflects market sentiment much more than wholesale numbers.
The ‘Vahan’ Data
We at The True Picture decided to take a look at the figures from Ministry of Road Transport’s Vahan platform and compare the monthly vehicle registrations of October of 2019 and 2018.
While October 2018 saw registration of sixteen lakh eighty-six thousand six hundred and fifty vehicles, October 2019 saw registration of seventeen lakh ninety-two thousand three hundred and ten vehicles, an increase of one lakh five thousand vehicles registered in the same one-month period with significantly higher revenue collected too.
Vehicles registered in oct-2019 (Source: Vahan Dashboard)
Vehicles registered in Oct-2018 (Source: Vahan Dashboard)
Data obtained from both private sector as well as government clearly proves automobile sales in India is growing at a very healthy rate and fears of any structural slowdown in this sector are ill-founded.