A Tepid Festive Season for Auto Industry, but Hope Remains

 

Dear Friends,

The current festive season has created a big dent in the sales for the current year. We have not seen such a Dull Festive season in the past 4-5 years. Even though, inquiry levels were good, we did not see conversions taking place as the customer sentiment was down and purchase decisions got delayed. There have been multiple factors which created such a big vacuum in sales.

Starting with the rise in Insurance cost from September onwards, we saw many negative factors come together with high fuel prices, share market fluctuations, deficient rainfall in some geographies and an overall liquidity shortage which was felt in the economy, being some key reasons, which played in the mind of the customers. 

Post the Navratri and Dussehra Festival we have seen some growth in Consumer demand as Fuel Prices have been on the downward trend from mid-October. The Rural Areas, especially those with good/sufficient rainfall, have also seen uptick in demand during Diwali as the agriculture produce cash flow has begun. The 2W segment which had seen a huge de-growth during the Navratri/Dussehra festival has seen some recovery during Diwali. The commercial segment, due to continued infrastructure growth, was still quite buoyant and the Positive growth in this segment continues, although the festive season has seen the growth percentage come down even in this segment. 

With the Festival sales below expectation, the current inventory levels are a cause of concern for all of us. While speaking with many of you, I get a sense that the current inventory levels, post festive season have gone up by a substantial percentage, especially in the 2W and PV segments. With Headwinds still quite strong post Diwali, demand is expected to remain muted in the next 30-45 days and each of us will have to work with our Principals on reducing the above normal inventory buildup and help reduce the additional interest burden.

With many of the OEM’s having maintenance shut down during November, it will allow some of us to re-calibrate inventory levels. The December sales bonanza, which is launched by almost all OEM’s, will also allow us an opportunity to come to routine inventory levels by the calendar year end.

These are challenging and dynamic times and despite our best individual efforts there are external factors which have driven the sales below our expectations these past 2 months and might continue to do so in the immediate future.

During such times, till positivity returns to the market and gets us back to volume growth, we need to work on our internal systems and work on cost control so that expenditures can be curtailed. Caution needs to be taken that in the process of cost control, strictures should not be passed on costs which directly contribute to sales and service productivity. In fact, in times of slow growth, inputs towards productivity should be increased, but there are many variable costs which can be reduced and help subsidize loss of revenue.

F A D As next council meeting will be held on 20th December’18 in Ahmedabad. As part of making Auto Dealership Community Internally Stronger, the council meeting will be followed by Vyapar Gujarat. For the first time, F A D A will be doing an event in Gujarat - Vyapar on the theme “Together Towards Tomorrow”. The event will be held at Courtyard by Marriott, Ahmedabad. I will appeal to all our friends who are based in and around Gujarat, to come and attend the same. I am sure, as always, it will be a very informative session for all of you. 

As part of our reaching out to the various Ministries, Mr. Priyank Bharti, Joint Secretary, Ministry of Road Transport and Highways (MoRTH) visited F A D A Secretariat on our invitation. We discussed many issues with him which included seamless implementation of Vahan across all the RTOs which are still not using the same. We are also discussing on how both MoRTH and F A D A can join hands and do seminars on various topics which are of interests to both of us across the country.

NADA Convention for 2019 is planned in San Francisco, USA from 24-27th January 2019. As always, F A D A is planning to take a sizable delegation. All the latest ideas, best practices, technology trends keeping in mind the Dealership Community gets first released here at the NADA Convention. With Autonomous and Electric Mobility knocking on our doors, the Convention is the best place to be present in for learning how can existing dealerships re-tune their business and processes with the changing business landscape. Our Immediate Past President, Mr. John K Paul and I will be Leading the Delegation and We invite you to come and experience the Latest in the Automobile Industry. Members who have still not registered are requested to do so by getting in touch with Mrs. Indira Menon at This email address is being protected from spambots. You need JavaScript enabled to view it.

To sum up my message, let me say that I am an Eternal Optimist and my positive takeaway from this festive season is that Inquiry levels have not seen as big a drop as retail numbers. Our customer has taken the effort to visit our showrooms or called us to inquire about our products, just not concluded on his interest. This fills me with hope that as soon as the negative factors, which are temporary in nature, get sorted out, we will once again be on the Growth Trajectory that the Auto Industry was on till August.

Wishing all of you a Bumper Bonanza of Sales in December.

Happy selling and a Happy New Year in advance.

Warm regards,

Ashish Harsharaj Kale

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