NEW DELHI: Anticipating a bumper festive season, passenger vehicle (PV) makers have filled inventory at dealer showrooms to an ‘alarming’ level.
The Federation of Automobile Dealers Association (FADA) said on Tuesday that inventory levels for the passenger vehicle segment last month surpassed the 60-day threshold, establishing an all-time high even before the onset of the 42-day festive period.
The average inventory of PVs at the end of August ranged from 58-63 days, up from 50-55 days in July and 30-35 days in August last year. “It is alarming that inventory levels have exceeded a 60-day supply for the first time, even before the onset of the Navratri-Diwali festivities—a trend that necessitates vigilant monitoring by private vehicle original equipment manufacturers,” said Manish Raj Singhania, FADA President.
Carmakers are expecting strong sales during the festival season, a period which accounts for nearly one-fourth of their annual sales. At present, the impact of semiconductor shortage on manufacturing activity has also subsided. Hence, they are producing more and reporting record monthly dispatches to dealerships.
A dealer showroom in New Delhi of a car company confirmed the high inventory level. The showroom manager said while demand for SUVs remains strong, they are finding few buyers for smaller cars. “We have conveyed the message to the OEM about low small car sales. We are likely to offer discounts and offers on them to avoid inventory build-up,” the manager said while requesting anonymity.
While giving a near-term outlook, Fada adopted a cautious stance and said that low rainfall may impact rural demand during the upcoming festive season. According to the Indian Meteorological Department, August of 2023 was the driest August in 122 years. “In the 2W market, while a broader range of models is now available, subdued rural demand due to insufficient rainfall could temper sales growth,” said FADA.