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Auto Slowdown: Expect to see pickup in demand during festive season, says FADA

Updated : August 20, 2019 11:28 AM IST

As the auto sector continues to grapple with the sales slowdown, CNBC-TV18 spoke to experts to get a sense of the ground situation and whether there are any green shoots on the horizon. Ashish Harsharaj Kale, President of Federation of Automobile Dealers Association (FADA) and Nikunj Sanghi, director at FADA, discussed their views.

"Monsoons are always good for the positive sentiment of the customers. With the kind of discounts companies have rolled out and with BS-VI coming there would be some amount of pre-buying and this festival season should see some pick-up in demand. I definitely see things will get better now-on, this month might be poor but way ahead is a positive,” Sanghi said.

Kale said the inventory in the passenger vehicle segment is already on a downward trajectory and with a pick up in retail in September, there would be a decrease in inventory in the commercial vehicle and two-wheeler space as well. "One is also expecting some major support from the government", he added.

Another key factor that would support the sector is liquidity, and last month liquidity was surplus in the system. "Now we are waiting for aggression to come back in retail lending from banks, NBFCs and also the transmission of rate cuts that have happened by RBI into retail lending", said Kale.

"From the government one is hoping for a scrappage policy, which would be a kick in the trigger for commercial vehicles and even for the passenger vehicle segments when it comes to fleet operations, taxis. This would help kick off demand," said Sanghi.

“A push in retail lending with lower rates of interest would be a good trigger for demand along. A cut in the GST would also help the entire auto sector, “said Sanghi, adding that he did not see any division on the decision of GST cut from within the industry.

“In terms of dealer funding, the dealers who are good in their overall business environment have no issues. Banks are also coming forward and supporting dealers in this difficult period,” said Kale.
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