Despite sales surge, Indian car dealers struggle with ₹75,000cr inventory
Indian auto dealerships are struggling with a massive stock of around 7,50,000 units worth ₹75,000 crore. This is even after a major surge in passenger vehicle (PV) registrations in October. These stocks, according to the Federation of Automobile Dealers Associations (FADA), are likely to last for around 75-80 days at different sales outlets across the nation.
FADA highlights inventory challenges
FADA President, C.S. Vigneshwar, has observed that despite healthy retail sales due to strong market interest and higher vehicle availability, inventory levels have only declined by a five-day stock. He said, "PV OEMs continue to heavily stock dealers, resulting in an overall inventory still at a high of 75-80 days." Vigneshwar also disclosed that most unsold vehicles are hatchbacks and sedans while SUVs make up a smaller portion of the unsold stock.
Dealerships record high retail offtake
In October, dealerships sold some 4,50,000 units of PVs, registering a year-on-year growth of nearly 34% over the same month last year. However, despite the surge in sales, FADA has raised concerns over the possibility of challenges like inventory overstock and economic headwinds affecting sales momentum in November and December. The association has stressed the importance of strategic inventory management during these uncertain times.
Carmakers respond to concerns
In light of the inventory concerns, top carmakers have begun taking action. India's largest carmaker, Maruti Suzuki, has recalibrated its wholesales to match retail figures. The company is looking to bring down inventory levels to 30 days by November-end. Hyundai Motor India Limited (HMIL) has also managed to reduce its inventory levels to 30 days after a registration spike of over 30% this festive season over last year.
Tata Motors and Mahindra address inventory challenges
Tata Motors is looking to ramp up sales in Q3 (October-December 2024) to control its high inventory. The company has already cut supplies to keep stock levels in check. Meanwhile, Mahindra and Mahindra (M&M) said its stock levels are much lower than its rivals, with inventories now far below 30 days at dealerships after a strong festive season offtake.
