In a first, Maruti Suzuki has started preparations for reporting its monthly sales based on vehicle registrations, shifting from the current practice of announcing factory despatches to dealers every month, said people aware of the development.
India’s largest carmaker plans to report sales data based on its vehicle registrations on the Ministry of Road Transport & Highways’ (MoRTH) Vahan portal as it seeks to better match car supplies with on-ground demand, people said.
Maruti’s strategy is also expected to curb bogus retailing by dealers and usher greater transparency as dealers will henceforth earn incentives only based on their sales performance on Vahan, the people said.
MG Motor India and Tata Motors are the only two mass carmakers who currently follow the practice of incentive pay out to dealers based on vehicle registrations.
Confirming the development, Partho Banerjee, senior executive officer, sales and marketing at Maruti Suzuki said the company has initiated dialogue with other carmakers through industry body, Society of Indian Automobile Manufacturers (Siam) to switch to Vahan-based reporting as vehicle registrations and not factory despatches are the true reflection of demand.
“Vahan is an excellent initiative by the MoRTH. Today, everyone is reporting wholesale numbers which doesn’t give the correct picture as one is simply moving the stock from the factory to the dealer stockyard. We are also suggesting Siam to move in that direction,” said Banerjee.
RTOs (regional transport offices) of most states, except for Telangana, share vehicle registration data with Vahan portal. Telangana accounts for 3.5% of India’s total car sales.
As a first step, starting August, Maruti has linked monthly sales incentive payout to its dealers to Vahan registration data. Gradually, all other types of incentives earned by dealers, including those linked to sales targets during festive season, off season, on slow-moving models., etc will also be linked to Vahan sales data, said a person aware of the plans.
Terming it as a “very good initiative” by Maruti, Manish Raj Singhania, president at Federation of Automobile Dealers Associations (Fada) said this would prompt other automakers to move to Vahan-based sales planning and forecasting.
“At Fada, we have been advocating this since we started publishing retail sales data based on Vahan in 2018-19. Now that all states are on-board it makes sense for the auto firms to switch to Vahan,” he said.
Under the current system, a dealer adds details of a new vehicle and its owner in the manufacturer’s dealer management system (DMS) as soon as the customer invoice is made. At times, the vehicle is shown as sold in the DMS even when it is not registered and delivered, and is done later, occasionally due to customer preference to coincide with an "auspicious day."
Also, at times, under pressure from manufacturers to meet sales targets and earn incentives, retailers resort to bogus retailing. Hence, the DMS derived retail sales data doesn’t present the actual scenario to the manufacturers, eventually influencing factory dispatches.
Sales forecasting and planning based on Vahan data, which is relatively more accurate, is likely to make the entire sales tracking exercise more efficient, said an industry executive.