Anand Mahindra says auto industry needs to switch to reporting retail and not wholesale volumes

Anand Mahindra, Chairman, Mahindra Group made his stand clear on Twitter on Sunday regarding the debate over whether the domestic automobile industry should report wholesale or retail figures every month. He was all for retail figures over wholesale, according to a report in Business Today.

The industry really needs to switch to reporting retail and not wholesale volumes. There are some strong signs of life in the market. And pipeline stocks have been slashed by controlling billings to dealers. Very appropriate stock levels now. https://t.co/Y6M1PcGcMT

— anand mahindra (@anandmahindra) November 1, 2019

Mahindra's tweet was in response to the auto firm's managing director Pawan Goenka's tweets on Sunday. Goenka tweeted the company's retail sales were the highest-ever in the month of October. He was of the view that even if reporting is retail, nothing changes from the point of view of revenue recognition.

Even if reporting is retail, nothing changes from revenue recognition viewpoint. https://t.co/yB0RZ9B0H6 — Pawan K Goenka (@GoenkaPk) November 1, 2019

To Mahindra's tweet favouring retail figures over wholesale, Goenka tweeted:

Reporting retail was a big area of discussion in The ACMA annual meeting. Idea is supported by several OEMs. SIAM is looking into it. https://t.co/tensFn53rJ — Pawan K Goenka (@GoenkaPk) November 1, 2019

On the first of every month, the automobile industry reveals wholesale figures. This gives an indication of the number of cars dispatched by each manufacturer from their factories to the dealerships.

File image of Anand Mahindra. Reuters.

In September, automobile dealers’ body Federation of Automobile Dealers Associations (FADA) has asked its auto industry counterpart Society of Indian Automobile Manufacturers (SIAM) to start reporting monthly sales data on the basis of actual registrations on the Road Ministry’s VAHAN platform instead of wholesale despatches, according to a PTI report.

Both FADA and SIAM source their retail sales numbers from vehicle registration data from the VAHAN database maintained by the Ministry of Road Transport and Highways.

In a letter addressed to the  (SIAM) President Rajan Wadhera, FADA President Ashish Harsharaj Kale said reporting retail numbers is also a norm which is followed internationally and would help in the betterment of the auto industry.

“Both dealers and component manufacturers felt that it would have been easier to predict the ongoing slowdown in auto sales if retail numbers were reported, helping all in their inventory management and would have kept them better placed in facing these dynamic times,” Kale wrote in the letter.

FADA has been advocating this from November 2018 and many of its members have also done the same with their respective original equipment manufacturers (OEMs) and have received a positive response of accepting it, given if it becomes an industry practice, he added.

“Hence, I request you to please use your good offices to impress upon all the members of SIAM as well to report retail sales which is now available in VAHAN, instead of factory despatches and graduate to market share calculation of the industry and of dealer partners by registration data instead of wholesale despatches,” Kale said.

--With PTI inputs