Is a fes­tive sea­son sales bump a myth for cars?

Mint ST - - NEWS - Malya­[email protected] NEW DELHI feed­[email protected]

The gap be­tween whole­sale dis­patches by au­tomak­ers and the num­ber of ve­hi­cles ac­tu­ally sold by deal­ers in the run-up to Di­wali has been widen­ing steadily for five years, new data shows, ex­plod­ing the myth that this year’s low sales are a one-off caused by ris­ing crude prices and a liq­uid­ity crunch.

The data, pub­lished by the So­ci­ety of In­dian Au­to­mo­bile Man­u­fac­tur­ers (Siam) and Va­han, the ve­hi­cle reg­is­tra­tion web­site of the Union gov­ern­ment, comes amid an out­cry by deal­ers across the coun­try about the sub­stan­tial and con­tin­u­ous dump­ing of in­ven­tory by man­u­fac­tur­ers even as re­tail sales de­cline.

The data in­di­cates that the gap usu­ally nar­rows af­ter Di­wali, in Novem­ber and De­cem­ber, as man­u­fac­tur­ers slow down pro­duc­tion dur­ing the last month of the cal­en­dar year.

The data, ac­cessed by Mint, has al­lowed a com­par­i­son over a time­line be­cause ve­hi­cle reg­is­tra­tion fig­ures, pre­vi­ously held back by the gov­ern­ment, have now been re­leased.

Ac­cord­ing to the data, dur­ing the two-month pe­riod to Di­wali (Au­gust and Septem­ber) in 2014, ac­tual reg­is­tra­tions of ve­hi­cles at deal­ers were 67.9% and 61.7% of the to­tal ve­hi­cles dis­patched by man­u­fac­tur­ers.

In 2015, the fig­ure was 63.7% and 60.3% in Septem­ber and Oc­to­ber. In 2016, of the to­tal num­ber whole­sale dis- patches to the deal­ers by the com­pany only 64% and 55.2% were reg­is­tered and in 2017 the fig­ure stood at 57.7% and 54.6%. In 2018 the gap widened the most to 53.8% and 52.3% in the two months to Di­wali.

How­ever, when it comes to Novem­ber and De­cem­ber, the gap nar­rows sig­nif­i­cantly to 90% or more.

The data in­di­cates that au­to­mo­bile man­u­fac­tur­ers may have failed to pre­dict the ex­tent of the im­pact of fac­tors such as crude price in­creases, hikes in ve­hi­cle loan rates and the stock mar­ket crash on auto sales and, as a re­sult, con­tin­ued to push in­ven­to­ries in ex­pec­ta­tion of healthy fes­tive sales.

Ac­cord­ing to the data, till Oc­to­ber this year, ve­hi­cle reg­is­tra­tions as a pro­por­tion of whole­sale dis­patches never crossed the 80% mark in any of

If you only scan the head­lines, you could be for­given for think­ing that the Us-china trade war is mainly about tar­iffs. Af­ter all, the pres­i­dent and trade-war­rior-inchief has called him­self “Tar­iff Man”. And the ten­ta­tive trade deal be­tween US Pres­i­dent Don­ald Trump and Chi­nese Pres­i­dent Xi Jin­ping was mainly about tar­iffs, es­pe­cially on items like au­to­mo­biles.

But the star­tling ar­rest in Canada of a Chi­nese tele­com com­pany ex­ec­u­tive should wake peo­ple up to the fact that there’s a sec­ond Us-china trade war go­ing on—a much more stealthy con­flict, fought with weapons much sub­tler and more dev­as­tat­ing than tar­iffs. And the prize in that other strug­gle is dom­i­na­tion of the in­for­ma­tion tech­nol­ogy in­dus­try.

T h e ar­rested ex­ec­u­tive, Wanzhou Meng, is the chief fi­nan­cial of­fi­cer of tele­com equip­ment man­u­fac­turer Huawei Tech­nolo­gies Co. (and its founder’s daugh­ter). The of­fi­cial rea­son for her ar­rest is that Huawei is sus­pected of sell­ing tech­nol­ogy to Iran, in vi­o­la­tion of US sanc­tions. It’s the sec­ond big Chi­nese tech com­pany to be ac­cused of breach­ing those sanc­tions—the first was ZTE Corp. in 2017. The US pun­ished ZTE by for­bid­ding it from buy­ing Amer­i­can com­po­nents — most im­por­tantly, tele­com chips made by Us-based Qual­comm Inc.

Those pur­chas­ing re­stric­tions were even­tu­ally lifted af­ter ZTE agreed to pay a fine, and it seems cer­tain that Huawei will also even­tu­ally es­cape se­vere pun­ish­ment. But these episodes high­light Chi­nese com­pa­nies’ de­pen­dence on crit­i­cal US tech­nol­ogy. The US still makes—or at least, de­signs— the best com­puter chips in the world. China as­sem­bles lots of elec­tron­ics, but with­out those cru­cial in­puts of US tech­nol­ogy, prod­ucts made by com­pa­nies such as Huawei would be of much lower qual­ity.

Ex­port re­stric­tions, and threats of re­stric­tions, are thus prob­a­bly not just about sanc­tions—they’re about mak­ing life harder for the main com­peti­tors of US tech com­pa­nies. Huawei just passed Ap­ple Inc. to be­come the world’s sec­ond­largest smart­phone maker by mar­ket share (Sam­sung Elec­tron­ics Co. is first). This marks a change for China, whose com­pa­nies have long been stuck do­ing low­value assem­bly while com­pa­nies in rich coun­tries do the high-value de­sign, mar­ket­ing


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