Sale of automobiles in the domestic market has declined 19 per cent in February. The industry is clamping down on production in the run up to the March 31 deadline on sale of BS-IV vehicles even as fears of coronavirus impacting sales have grown in the last few days.
The industry needs to liquidate all its stock of BS-IV vehicles, which will not be allowed to be registered from April 1 onwards, resulting in a decline in dispatches to dealerships across all categories last month. Sale of passenger vehicles was down 7.6 per cent, commercial vehicles by nearly 33 per cent, two wheelers by nearly 20 per cent and three wheelers by 31 per cent.
"The decline in wholesale dispatches is primarily due to economic slowdown and lower production of BS-IV vehicles. Some upside on the registration numbers of VAHAN can be attributed to last minute purchase by customers trying to advance purchase of BS-IV vehicles," said Rajan Wadhera, President, SIAM. "Supply chain disruptions from China are also a concern, which may impact the production plans for companies going forward," he said.
While the automobile manufacturers have been grappling with supply side constraints on components due to the virus that has spread from China and beyond to other countries including India, the industry body for dealers FADA had on Thursday said it has witnessed an alarming 45 per cent drop in footfalls at dealerships across the country. This may impact clearance of BS-IV stocks in the run up to the end of this month, which would be critical for a smooth transition to BS-VI emission regime.
"These are uncertain times and March is a very critical month on account of the transition," said Rajesh Menon, Director General, SIAM. "The situation is changing from one day to the next so we need to wait and watch. The heartening thing is retail sales in February was positive and in some segments like commercial vehicles it showed a healthy growth. That gives us hope," he added.