High passenger vehicle stockpile rings alarm bells amid festive sales

Indian automakers are grappling with an unusual challenge this festive season: Despite achieving record wholesale shipments of passenger vehicles (PVs) in October, showrooms are dealing with unprecedented levels of inventory, which concerns arise for both sellers and manufacturers.

With inventories averaging between 63 and 66 days, the Federation of Automobile Dealers Associations (Fada) urged manufacturers to resolve the issue promptly. On Monday, Fada urged them to moderate vehicle launches and introduce attractive schemes to encourage car sales.

“This dual approach is necessary to help dealers clear their inventory before the end of the year, avoiding the potential financial consequences of excess unsold stock,” Fada said in a statement.

According to Fada, the number of bookings increased in the Navratri period due to the introduction of new models, especially SUVs, and attractive offers for consumers. Vehicle registrations during Navratri, as a result, increased by 18%, an all-time high surpassing the previous highs recorded in 2017. However, due to the impact of local elections and market saturation the spirit of festival uniformly into all sales. regions, he said. Vehicle passenger registrations increased by 6.5% in the 10-day Navratri period (from October 15-24) year on year to 140,000 units, data released by Fada showed.

Registrations in October were at 354,000 units up 6.5% from September, but down 1.36% from a year earlier. However, it can be noted that, unlike last year, there was a period of 15 days at the beginning of this October which was considered inauspicious for big ticket purchases.

“The PV segment is going through a complicated phase. Holidays may boost bookings, but the shadow of end-of-year discounts is reliant on immediate sales. High inventory levels in PVs, at a critical range of 63-66 days, require urgent attention from OEMs. Without substantial interventions and if Diwali sales do not rise to the occasion, the weight of unsold stock could lead to severe distress for the seller, reflecting Long’s concern about potential industry-wide ramifications. Immediate and decisive action is necessary to tackle the risk of financial strain as the year draws to a close,” said Manish Raj Singhania, president of Fada.

The recent surge in wholesale passenger vehicle shipments, growing 16% in October to 390,000 units compared to a year earlier, may be a positive sign. However, industry executives cautioned against interpreting this growth as the only indication of demand.

“Now, the stock level is high at 335,000 units, roughly equivalent to 30 days of sales. The first 15 days of November are favorable, especially in the north and center of the country, and Samhain will depend on how the first 15 retail days went. If retail sales are slightly lower than expected, we may see an impact on the wholesale volume going forward from November as the stock is quite high,” said Shashank Srivastava, senior executive director of Maruti Suzuki India Ltd.

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Updated: 06 November 2023, 11:35 PM IST

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