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-   -   FADA tells SIAM to calculate market share on the basis of actual car registrations (https://www.team-bhp.com/forum/indian-car-scene/213173-fada-tells-siam-calculate-market-share-basis-actual-car-registrations-2.html)

In a step further, would be really interesting to get registration data of the last 12-24 months and compare it with the current data.

Moving forward as well, it would be nice to get both datasets so that analysis can be done of "dumping".

Why suddenly now the FADA is demanding such move? Auto industry had shown effects of a slowdown earlier as well (eg. 2008).
May be this time along with OEMs, dealers are facing the most pressure of it (could be due to NBFC crisis along with BSVI & rising vehicle cost).
Well if OEMs start reporting retail nos., will there be any target or competition in market left ? Sales executive will simply stop pitching the product to a customer ? And in that case, why an OEM would need the support of a dealer. It might start selling cars directly through an online channel on demand basis? Like seriously, running a production line as per the demand from the ground level ?? (Imagine)
And most importantly, Where is the Business Plan? How an OEM would plan the production for an entire year?
Retail is only feasible for an OEM which is selling less & has flexible manufacturing theme.
OEM (eg. Maruti, Hyundai) which utilize their plant capacity cent percent would just cant support such a move.
Regarding piling up inventories, whether they pile up at dealer stockyard or OEM stockyard, someone has to suffer the loss & handle the pressure.
At the end of the day, its an OEM providing business to a dealer & by such move FADA could have a upper hand over SIAM? Which we all know, is not an optimal solution.

A good suggestion by FADA to SIAM. In fact, the FADA members are the SIAM's contact arm with the general public and customers in particular as SIAM is a self- contained body, who are always in the news lobbying with the government for sops. SIAM's one, only and sole agenda is to sell more and more cars (usual rants of 2019 :- scrap the old, reduce GST, easier finances, don't upset BS IV and BS VI with EV's and so on), achieve Year on Year (YoY) growth rates, make handsome profits and help its learned members survive and also fluorish !

FADA has a wide spectrum of members including some good ones, not so good ones and also the few notorious dealers, who have been reported from time to time on teambhp for their blatant deeds and acts, so violative of natural justice and common ethics.

To comply with the FADA's new "actual car (motor vehicle) registration definition" suggestion to SIAM, they will have to work in tandem. FADA members will have on a weekly or fortnightly basis report the sale/ registration figures from their dealerships (again after sale, the yellow, temporary registration plates in many localities are seen happily surviving for upto a month or more) to the SIAM to help them comply and report proper figures, as desired.

So does sale to the buyer seal the final figure for SIAM (lock kiya jaaye) or is it the final RTO registration process completion of a motor vehicle, that will increase the tally for SIAM ?

Much like any bureaucratic organisation's pronouncement these days, it appears there will remain grey areas and enough spadework to be done both by the SIAM and FADA to comply with such a guideline.

As an aside, actual vehicle registrations with RTOs could provide a good idea of the vehicle sales.

These figures are usually published around festival times. Dusshera is round the corner, let's see the figures then.

Wrong calculation. All manufacturers just refill the inventory. Whatever is sold in a month, is refilled. And the inventory is always kept under check. If your theory is right, the inventory for Maruti will keep on increasing by 20K per month. That is not the actual case.

How easily we are reducing SIAM to a no good agency. Such agencies are present worldwide and in all industries. They represent vested interests and rightly so. SIAM is a lobby group and has never pretended to be anything else.
With regards to retail as a barometer of performance, I think it's a swell idea. If I am not mistaken, Maruti, Toyota have already switched to this system internally, since last year end to get a realistic picture of market. Hence we see the record fall in sales of Maruti.

I wonder why we are reinventing the wheel again. If it was so obvious that retail sales be considered, why was it not brought to the notice before. A perfect example of a reactive mechanism instead of being a pro active one.

Is easier said than done in this case.

Currently VAHAN system is not implemented across India and also has lot of challenges in extracting the data. I think unless the system gets implemented across all states and stablises it wont give the right picture.

Moreover, i think the current market share calculation which is based on Wholesale dispatches does in a way reflect actual demand scenario with a lag.

The FADA suggestion/ request is justified IMO. This is reflects the reason for so many dealers going kaput in past few years.

Actually they have a different reason than published. I have not gone through other threads on current auto sector situation coupled with NBFC crisis, hence, my comments could be repeat of something what others might have already posted/ published.

I'm from senior management (accounting & tax) background & have fair bit of idea what happens when we do the reporting. Recall the joke where a CA asks the interviewer the total of 2+2 depends on what the person on other side wants.

The sales data that we have monthly thread on is actually dealer dispatches (this is acknowledged, & I believe majority TBHP-ians are aware of this fact). The actual sales numbers are way lesser, though the variance differs from one company to another. Afterall, it's about Topline & Bottomline in an environment of opaque information, but the cashflows are rarely reported. For hard cash is profit, rest all is presentation (statutory & situational)

What happens when cars are dispatched to dealers & monthly numbers reported:

1. The company bills the dealer for dispatches/ bookings in their name.
2. Periodic reports are sent to regulatory authorities, media, stock exchange & other stakeholders.
3. 7-10 days later reversals are passed for excess invoicing (where stronger dealer categorically denies/ decline to honour the invoice). It could be 10% of monthly billing in certain cases.
4. Banks/ NBFCs come into picture here. For the remaining sales are sent for factoring/ discounting & cash flows in to the auto major's account. Till the time major frauds were not unearthed, there was no problem here & most of the time auto-cos would get around 97% of the money in due course (rather short period).
5. Banks would then follow up with dealers for money (they don't lose money here except for the dealer going kaput, in which case the auto-co payments would be adjusted in future).
6. Dealers would only pay the money to Bank when they could sell the stock. Believe me for few dealers (not brands) the stock situation is worrisome till date.

While the auto-major & bankers were always in win-win situation the dealers, who are the smaller/weaker parties with lesser management/ business skills & poorer credit (rating), were the losing parties (hints to reason of dealer shutting shops) in this game where the rules are unduly favouring the other parties (I'm not taking socialism here).

What happens when FADA's recommendation is accepted & applied:
1. Monthly sales numbers will go on for some time like the inflated ones we saw till early this year. But, soon the jugglery of number will be brought to limelight, Govt will tweak standards.
2. Bank & Lenders will finance (discount/ factor) sales based on market share more nearer to actual vehicles bought by junta.
3. Auto-cos would take a hit (read book loss) one time but their books will be more realistic though they will be under stress in future. Believe me not any auto-co management is under stress in world.
4. Dealers would be under lesser pressure to pay to bankers/ lenders. This arrangement will also ensure that dealers creditworthiness reflects the auto-co in fair business environment.
5. Lesser number of dealers shutting shop (unless for unusual reasons) for they would sink or swim with the company.

But, this would not be acceptable to powerful auto-cos, & they can easily remove any dealer. For them it's easy to get a new dealer than the dealer to tie up with auto-co.

Believe me there not all factor are kept constant in my assumption for I'm not an economist.

This should have happened years ago. However, I seriously doubt SIAM will allow this to happen. RTO Data can be accessed, the OEM's have spent a lot of time & money to suppress this data.

If this data is made public, then there will be major surprises in the actual Market Share figures of the OEM's. No surprises in guessing who will be the most affected.

All OEM's follow a policy of loading stocks in Dealer Inventories. IMO the current decline in Wholesale numbers are because of two reasons:
Deliberate offloading of stocks before the advent of BS6
Most Dealer Inventories are financed by Banks / NBFC's through Floor Financing. I suspect a lot of dealers in the current scenario are unable to service this debt. So there is a destocking/deleveraging of inventory.

The moot point is would Retail Data help? Yes the transparency would help in making the whole supply chain a lot more efficient. A lot of inventory piles up because the OEM has not been able to plan accurately variants & colours leading to these vehicles clogging up the dealer inventory. In a scenario where all competitor data is Retail, they would have far better decision inputs.

It's a bitter pill to swallow, but crises lead to opportunity. SIAM should get over its lethargy and adopt Retail Data as the basis for Industry Volumes.

For us general public, this really doesn't make a difference, though it will give us more accurate visibility.
For FADA itself, its a bit of mixed bag - On one hand, the good dealers will get some relief from some of the tricks manufacturers play - Channel stuffing mainly and the tatics manufacturers use to achieve it.
On the flip side, it will bring a whole lot of transparency and traceability that bringing the sales online - and the dealers that play fast and loose with inventory/financing/sales numbers will get hit harder once the data is out in the open (and manufacturers will not need to spend time and effort on periodic audits to keep this in check), and they will get even more leverage.

For Manufacturers, while the better leverage with dealership is good, they will not be able to manage their sales numbers and forecasts as smoothly as they used to, and they will have to face more scrutiny from investors monthly.

All parties have incentive to maintain status quo - I think this is just posturing. Let's see

While the Wholesale nos would be higher in some months than retail, but it can not be far apart (read higher) continuously for even 4 - 5 months. It is mostly 2 or 3 months and Retails would have to start kicking in or the entire cycle would break. Dealer's fund would get blocked if not retailed enough, which in turn will affect his ability to pickup fresh vehicles and payback Banks. So ofcourse dealer stock would be varying from time to time from less than one month to more than 2 months, it can not go on for long. Beyond a point OEMs can not push extra vehicles and that is a fact.

Regarding reversals, I believe many of the Indian OEMs are listed on stock exchange and have to follow the statutory guidelines. As per external audit process, if a sale is reversed in month. other than actual billing month then the same will get deducted from the sale of the respective month of reversal, and generally every quarter accounts are updated for such reversals. So it would be slightly unfair to the OEMs if we say that they reverse 7 to 10% of billing every month, as it would be termed as illegal practices and can not go on and on for long.

About time and way to go! Let's hope SIAM agrees and makes it official soon.

Wholesale reporting is skewed and even leads to irrational public perception about vehicle demand.

Cheers,
Dtox.

This point of yours is totally wrong. Reversals are very seldom in our country. In the rare case the reversals happen, they are deducted from next month's numbers. You would remember that when Taveras were recalled there was negative numbers reported in one month as reversals had happened and no new dispatch had occured.

Wholesale number is higher than retail numbers in most months but it averages out in long term. Gh

https://economictimes.indiatimes.com...w/71658239.cms

I came across this in ET today. RTO data as per SIAM shows growth in registrations of 6.7%. While as per FADA after they apply their "Filters" (sic) shows a double-digit decline. I think vested interests are at play here.

Reminds me of the adage "Facts are stubborn things, but Statistics are pliable".