Two-wheeler makers asked to curb production as dealer inventory piles up

The Federation of Automobile Dealers Associations (FADA) requested all two-wheeler manufacturers, among others, to assess on-ground inventory level and curb production accordingly, stated a release by the association on Monday.

"FADA once again cautions both OEMs (original equipment manufacturer) and dealers to keep a check on vehicle inventory as post festivals, demand may remain subdued. Since inventory levels are at its highest during this financial year, it may impact dealers financial health thus leading closures and job losses," the release said.

FADA released the monthly vehicle registration data, across all segments, for the month of October 2020.

As per the data, the two-wheeler category saw 10,41,682 registrations in October 2020, as compared to 14,23,394 in the same month last year, leading to a year-on-year (y-o-y) decline of 26.82 per cent.

However, slump has also been witnessed in all segments, except tractors, on a y-o-y basis.

A total of 22,381 three-wheelers were sold in October, as compared to 63,042 in the last year, similarly commercial vehicles saw a slump from 63,837 in October 2019 to 44,480 in the last month. Similarly, passenger vehicle segment also witnessed a y-o-y decline of 8.80 per cent.

Tractors, however, have witnessed an increase with 55,146 being registered in October 2020, while 35,456 had been registered in the same period last year.

Speaking on the findings, FADA president, Vinkesh Gulati said, "October continues to see positive momentum on monthly basis but on a yearly basis the negative slide continues to increase. The 9 days Navratri period witnessed robust vehicle registrations but could not save October to go in red as compared to last year when both Navratri and Diwali were in the same month."

"While new launches continued to be in demand in the passenger vehicle segment, entry-level motorcycles witnessed a lean demand in the 2-Wheeler segment. With supply-side mismatch, most of the passenger vehicle dealers ended with limited stock of high selling items and odd variants, which did not attract much demand. This coupled with lower discounts, compared to last festivals also played a spoilsport," he added.

Gulati further urged the government to announce an attractive incentive based scrappage policy, and to release funds for infrastructure projects "as this will help demand generation and will lead to higher production of vehicles."