The debate over whether the Indian domestic automobile industry should report wholesale or retail figures every month intensified on Friday as industry veteran and chairman of Mahindra Group, Anand Mahindra waded into it making a pitch for retail figures over wholesale.
Typically, the industry reports wholesale figures on the first of every month, which essentially signifies the number of cars dispatched by each manufacturer from their factories to the dealerships. As the slowdown in the industry has deepened over the last few months, there has been a clamor for reporting retail numbers that signify actual sale of cars to customers at the dealerships as a better yardstick of consumer sentiment in the country.
"The industry really needs to switch to reporting to retail and not wholesale volumes. There are some strong signs of life in the market. And pipeline stocks have been slashed by controlling billings to dealers. Very appropriate stock levels now," Mahindra tweeted on Friday.
The industry really needs to switch to reporting retail and not wholesale volumes. There are some strong signs of life in the market. And pipeline stocks have been slashed by controlling billings to dealers. Very appropriate stock levels now. https://t.co/Y6M1PcGcMT— anand mahindra (@anandmahindra) November 1, 2019
The tweet came barely a few hours after Mahindra released its wholesale figures for October which showed a decline of over 23 percent. Mahindra's tweet was a reaction to a series of tweets earlier in the day by Pawan Goenka, the company's managing director. Goenka had said retail sales were the highest ever for the company in October.
"Congratulations to our dealer partners for delivering the highest ever monthly retail volume for Mahindra last month. I hope the retail momentum in October is an indicator of sentiment turning positive and will continue in coming months," Goenka had tweeted.
"You will be happy to know that between eVerito, eAlpha and Electric Treo, Mahindra retailed almost 2000 vehicles in October. Our highest EV sale in a month ever," he added in another tweet. "Congratulations to our tractor sales team and dealer partners for achieving the highest ever monthly deliveries last month. I hope this is a sign of things to come in the next few months."
In another tweet Goenka indicated that the company had resisted the temptation to dispatch more cars to its dealers, which would have increased its wholesale count, in a bid to keep inventory levels under control.
"Thank you our auto sales team for resisting the temptation of billing more in spite of high retails. Thanks to that discipline our dealer inventory is lowest in recent times," the tweet said.
Mahindra was not the only company to suggest that the market situation was better than what the wholesale numbers in October 2019 indicated. Tata Motors, Honda Cars and Toyota Kirloskar Motor, which like Mahindra reported a decline in wholesale numbers also said retail sales during the month were higher compared to the same month last year and inventory levels had been corrected. None of these companies including Mahindra though, were ready to release their absolute retail sales figures.
Mahindra's stature in the industry however, presents a new twist to the debate and his tweet exposes the fault-lines within the industry. A bitter struggle for one upmanship on this issue is already underway between the two main industry bodies-Society of Indian Automobile Manufacturers (SIAM) that represents the OEMs (vehicle manufacturers) and Federation of Automotive Dealers Federation (FADA) for over 15,000 dealers in the country. While SIAM releases collated industry wholesale data every month FADA has been pushing for a shift to retail data and has been releasing its own set of data sourced from government's Vahan website.
Typically the two data sets should even themselves out over a period of time but in the last 6 months as the slowdown has deepened there has been a divergence. While manufacturers have taken deep double digit cuts in production and SIAM's data has shown a 20 percent plus decline in sales, FADA's retail data is more optimistic with a mid single digit decline on most months.
The sales in October also reiterate the same trend. Only this time, manufacturers like Mahindra that are part of SIAM are also batting for retail numbers. Ironically, the president of SIAM, Rajan Wadhera who is himself the president of the automotive division at Mahindra had rubbished FADA's data on October 11 as inauthentic. He had then kept mum on whether reporting retail sales made more sense than wholesale.
India's automotive industry has always been a divided house but should the downturn in the industry prolong further, expect more fireworks.