December Auto Sales: Robust Inquiries, Bumper Offers and Discounts but Registrations Down 15%, Says FADA
After two months of positive sales during the festive period in October and its spillover effect in November, auto sales fell during December 2019. Despite robust inquiries and with offers and discounts at its peak, customers did not conclude their purchase as expected, showing continued weakness in consumer sentiment, says Federation of Automobile Dealers Associations (FADA).
 
According to FADA, during December 2019, overall vehicle registrations fell by 15%. Two-wheeler registrations were down by 16% and passenger vehicle (PV) registrations declined by 9%. Commercial vehicles (CVs) registered a de-growth of 21% and only three-wheeler registrations were up by a %.
 
Ashish Harsharaj Kale, president, FADA, says, "The sharp decline in growth has denied the dealer community an opportunity to reduce Bharat stage (BS)-4 inventory making the transition to BS-6 trickier. With such a weak consumer sentiment, FADA recommends a very cautious approach to its members with serious focus on BS-4 inventory liquidation."
 
As per data released by the Association, during December 2019, 1.26 million two-wheelers were registered compared with 1.5 million a year ago period.
 
During the month, CV registrations fell 21% to 67,793 from 85,833 while PV registrations fell 9% to 216,000  from 237,000 recorded in December 2018.
 
Three-wheeler registrations were marginally up at 58,324 in December 2019, compared with 58,031 same month past year.
 
 
The average inventory with dealers came down in December 2019 compared with previous month. Average inventory for PVs came down to 20-25 days from 25-30 days, while for two-wheelers and CVs it was 30-35 days as against 35-40 days in November 2019. 
 
 
On the inventory front, Mr Kale, says, "Although there was a slight reduction across all segments, the CV and two-wheeler inventory still remains a concern, especially looking at the transition and the current weakness in demand. PV for the first time is in the FADA recommended range of three weeks and a shout out of appreciation to our PV original equipment manufacturers (OEMs) for considering our recommendation, which benefits the entire ecosystem."
 
FADA, however, continues to raise concerns over liquidity. "Liquidity still remains a concern for the dealer community as well as for the retail customer as banking and finance industry continues to be in cautious mode despite sufficient liquidity being available," the Association says.
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    COMMENTS

    SANDESH PAWAR

    1 month ago

    I believe it is majorly to do with BS6 Transition. I have four friends waiting for 2020 to buy the vehicle they like. Althouth they are aware BS4 vehicles will to be allowed to be used, they just want to be on a safer side and not take chances.
    If we see the Success of MG and KIA who already have BS6 Vehicles, it does makes sense.

    Rejection of AGR Review Petition by the Supreme Court is Negative for Incumbent Telcos: Fitch Ratings
    The Indian Supreme Court's rejection of a review petition against its own earlier ruling in a long-running telecommunications sector related tax issue is credit negative for the industry. The apex court's rulings in this case could also have significant repercussions for India's banking sector, as well as the country's broader economic outlook, says Fitch Ratings. 
     
    Two incumbents, Vodafone Idea Ltd and Bharti Airtel Ltd will be particularly affected, the ratings agency says. 
     
    The Supreme Court's decision to reject the review petition is likely to cause the Department of Telecommunications (DoT) to demand that telcos pay up unpaid dues on licence fees and spectrum usage charges by 23 January 2020.
     
    Vodafone Idea and Bharti have jointly filed a moderation application with the Supreme Court seeking more time to pay the funds due. They may also approach the government to obtain relief. Vodafone Idea could also raise cash through sales of assets, such as its 11% stake in Indus-Infratel or its 158,000 km of fibre networks. However, the company's chairman has said that Vodafone Idea will close in the event it is unable to obtain relief from the Supreme Court or the government.
     
    According to Fitch, Vodafone Idea could face severe liquidity stress as a result of the tax case, as its cash balance of $2.2 billion as of September 2019 would be insufficient to pay its $6.3 billion of unpaid dues. The company's efforts to generate cash have recently been hampered by loss of subscribers and revenue to Reliance Jio, part of Reliance Industries Ltd.
     
    The ruling, according to Fitch, could also have repercussions for the banking industry, should there be defaults linked to the Supreme Court decision. The banking sector's exposure to telcos stood at 1.3% of loans at FYE19, within which we believe Bharti and Vodafone Idea account for a significant share. 
     
     
    "Exposure to the telco sector is generally greater among private-sector banks than state-owned ones. While private banks generally have stronger capital and income buffers than their state-owned counterparts, additional problems within the banking sector as a whole would add to the recent strains associated with real estate and non-bank financial institutions and could set back recovery from the sector's weak financial performance. If this continues to impinge on credit growth, it could also limit improvement in India's macroeconomic outlook," the ratings agency concluded.
     
    Last year in October, Fitch had placed Bharti's ratings on rating watch negative (RWN) outlook, following the Supreme Court's verdict against the country's telcos on the definition of adjusted gross revenue (AGR), based on which the incumbent operators must pay hefty dues to the government. "We will resolve the rating watch negative on Bharti's rating, based on our assessment of the positive impact of EBITDA growth from announced tariff hikes by all telcos in December 2019 and taking into consideration likely subscriber addition should Vodafone Idea gradually exit the industry," the ratings agency had said.
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    Zomato acquires UberEats India for nearly Rs 2,500 crore
    Zomato on Tuesday announced that it has acquired Uber's Food Delivery Business in India in an all-stock deal and Uber will have 9.99 per cent stake in the Deepinder Goyal-led food delivery platform.
     
    According to sources close to the deal, it is in the range of over $350 million or nearly Rs 2,500 crore.
     
    Uber Eats in India will discontinue operations and direct restaurants, delivery partners, and users of the Uber Eats apps to the Zomato platform, effective from Tuesday.
     
    "We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category," said Goyal, Founder and CEO, Zomato.
     
    According to company sources, for the first three quarters of 2019, "our Uber Eats business comprised 3 per cent of our global Eats gross bookings, but was more than 25 per cent of our global Eats Segment Adjusted EBITDA losses".
     
    Uber started its food delivery service in India around mid-2017, but has not been able to scale up in the face of big players like Zomato and Swiggy.
     
    It currently has nearly 26,000 restuarants listed on its platform from over 40 cities.
     
    The market is piping hot as according to a recent study by business consultancy firm Market Research Future, the online food ordering market in India is likely to grow at over 16 per cent annually to touch $17.02 billion by 2023.
     
    Uber CEO Dara Khosrowshahi said that the Uber Eats team in India has achieved an incredible amount over the last two years.
     
    "India remains an exceptionally important market to Uber and we will continue to invest in growing our local Rides business, which is already the clear category leader," said Khosrowshahi.
     
    "We have been very impressed by Zomato's ability to grow rapidly in a capital-efficient manner and we wish them continued success," he added.
     
    On January 10, Zomato had announced that it has secured $150 million in fresh funding from Ant Financial, a subsidiary of China-based giant Alibaba.
     
    The latest round of funding in Zomato, which currently value the company at $3 billion, is part of $600 million funding round announced by Zomato CEO Goyal at a Delhi event last December.
     
    The deal comes in the wake of merger talks between Zomato and Swiggy, whoch both the companies have denied to date.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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