Auto-dealers See Patchy Sales Recovery This Fiscal, Finds CRISIL Survey
Moneylife Digital Team 30 August 2021
Dealers of two-wheelers, passenger vehicles and commercial vehicles expect sales to increase 10%-15% this fiscal on a low base of last fiscal, driven by new model launches, pent-up demand, and festive season sales, reveals a survey conducted by CRISIL.
"Regional performance varies sharply, and north India appears most impacted," the survey says, "On the flip side, a possible third wave, spurt in fuel prices and supply constraints of original equipment manufacturers (OEMs) are seen among factors that could slow the sector down."
The survey was aimed at gauging dealer sentiment and expectations and drawing a comparison with the previous year's poll. It covered 123 dealers of two-wheelers and passenger and commercial vehicles with an appropriate mix across regions and OEMs.
According to Bhushan Parekh, director of CRISIL, past fiscal did see a demand uptick during the festival season, but it did not sustain and two-wheeler dealers were the most impacted. "This fiscal, too, sales across segments are yet to reach pre-pandemic levels. Also, the deal conversion cycle has doubled, with customers deferring purchase decisions. While the sentiment is positive among dealers, the risk of a third wave during the upcoming festive season is a key concern," he added.
Like the past fiscal, CRISIL says regional performance is expected to show sharp variation.
While most passenger and commercial vehicle dealers expect sales to improve across regions, 44% of passenger vehicle dealers in the north and 40% of commercial vehicle dealers in the south expect a decline. Last fiscal, 45% of the commercial vehicle dealers surveyed in the north and 67% in the west witnessed over 20% year-on-year (y-o-y) decline in sales.
Two-wheeler dealers are optimistic about sales this fiscal. Dealers in the east and west expect higher sales, while 33% in the north and 20% in the south are not hopeful. Last fiscal, about 60% of the two-wheeler dealers surveyed in the north and south reported over a 20% on-year decline in sales.
Mubasshir Bakir, associate director of CRISIL, says, “Low inventory levels will help quicker recovery and reduce holding costs. About 75% of the surveyed dealers reported less than 45 days of vehicle inventory due to better management. Indeed, while lockdowns started in April this fiscal, they had liquidated inventory in March. In addition, staff rationalisation and cost control measures initiated last fiscal year have softened the impact on dealers’ financials. Most of the survey respondents do not expect any material retrenchment or attrition of staff, or dealership exits this fiscal.”
Though the Indian government did not introduce specific measures for the auto industry’s revival in Union Budget 2021-22, it recognised auto-dealerships as micro, small and medium enterprises (MSMEs).
Since then, many commercial and passenger vehicle dealers surveyed have registered themselves as MSMEs, though two-wheeler dealers are yet to do so. This could be because many dealers are not fully aware of the credit schemes available for MSMEs and have only had moratorium extensions until now, the ratings agency says.
Private Partition of Public Property?
Ranganathan V, 28 August 2021
Splits and separations in business families necessitating segregation of the hitherto commonly held assets, including controlling holdings in corporate entities, is not a subject that would kindle any special interest, given that it...
MMTC Buyer Credit Fraud: ED attaches 45 properties worth Rs363.51 crore in Hyderabad
IANS 28 August 2021
The Enforcement Directorate has attached 45 immovable properties worth Rs 363.51 crore of M/s MBS Jewellers Private Limited, M/s MBS Impex Private Limited, Sukesh Gupta, Anurag Gupta, Neetu Gupta, Vandana Gupta and their other group...
Free Helpline
Legal Credit