 "Car wholesale numbers speed far ahead of retail")
Car sales have grown in India this year but the wholesale and retail figures tell starkly different stories.
In the April to October period, car sales clocked an impressive 11.5 per cent growth. But figures that are commonly reported are the wholesale numbers.
The retail side of the story is not as rosy - dealers claim actual growth during the period was in the range of five to six per cent, or half of the wholesale growth.
India is sitting on a passenger car inventory worth Rs 20,000 crore, according to market sources.
John Paul, vice-president, Federation of Automobile Dealers Associations - the apex national body representing automobile dealers - said retail demand has not been as great as the wholesale numbers showed. "The average inventory with car dealers across the country would be in the range of 55 days or so. While the festive season demand this year has been better than previous year, actual retail growth in the April-October period would be around five to six per cent, on a year-on-year basis," he added.
Explaining his claim, Paul said assuming 200,000 cars are sold every month, with dealers having an inventory of around two months, the size of the inventory would be roughly around Rs 20,000 crore, if one takes the average price of a vehicle at Rs 5 lakh.
That was precisely the problem with reporting retail numbers, claimed Vishnu Mathur, director-general, Society of Indian Automobile Manufacturers (SIAM). "Retail data is important as it reflects the real demand. Wholesale numbers do not factor in the inventory," he said, adding it was a common practice globally to report retail numbers.
In India, it can only happen if all the regional transport offices go online and actual car registration data is available.
Mathur said he was hopeful that once the "vahan" database (the register of vehicles maintained by the road transport and highways ministry) started to reflect data from all states, reporting retail numbers would be easier.
Major car OEMs (original equipment manufacturers) agreed.
R C Bhargava, chairman, Maruti Suzuki - the country's leading passenger car maker - said: "It is about time that India starts reporting the retail sales numbers, as it would give the correct consumption picture."
Maruti Suzuki's wholesale figures clocked a 14.4-per cent growth during the April-October period but the retail numbers grew at only 6.4 per cent. The dealer inventory level was at four to five week, which the company claimed was according to plan.
Shekar Viswanathan, vice-chairman, Toyota Kirloskar Motors, said, while the October sales growth, spurred by festive demand, was around 22 per cent, the actual retail numbers would be inevitably be lower. "Shifting towards reporting retail numbers would give a better insight to policy makers into the real demand in the market," he said.
He added while some companies posted healthy wholesale figures, their retail numbers might not be that good.
A look at SIAM production and domestic sales data might throw more light on the difference between the wholesale and the retail sales.
Indian OEMs sold 1,171,195 passenger cars between April and October this year, up 11.5 per cent. They produced 1,479,939 passenger cars during the same period, a rise of 8.9 per cent, as dealers were already carrying inventory. However, exports grew a meagre 0.6 per cent during this period, not accounting for much of the production.
Companies, as of now, do not share retail numbers as regulations do not mandate it.
A Tata Motors spokesperson said: "We usually do not share retail figures but we continue to work very closely with industry bodies such as SIAM and regulatory authorities towards developing the regulations road map for India."
An automobile industry veteran, who has worked with a Korean multinational car manufacturer, said it was time reporting retail numbers was made the norm.
However, others claim India did not yet have the infrastructure to do so.
Pravin Shah, chief executive, automotive division and international operations, Mahindra & Mahindra (M&M), said: "The business model of OEMs and dealer networks is such that it (reporting retail figures) would lead to maintaining a certain inventory level, factoring in transportation and finance needs. An ideal inventory level should be around three to six weeks."
He added M&M dealers had an inventory of about five to six weeks, depending on the models.
Dealers said the demand this year had been better than previous year, especially in October, but much of it was spurred by new launches. November was also likely to be a good month.
Industry expert Abdul Majeed, partner, PwC India, said nearly 13-14 per cent of the sales growth had been from new launches in the past two months. "If you take that out, the demand growth would taper down to six or seven per cent. Add to this, the drought situation in rural India, which has also affected the demand."
The rural market accounts roughly for a third of India's small car demand. Deficit rains, delayed sowing of winter crops and rising inflation have slowed down the growth trajectory car demand in India's countryside. It is estimated that from an 18 per cent share of the automotive sales a year ago, the rural markets contributed around 15 per cent this year.
