Indian dealers’ association reported a 7.7% year-on-year decline in retail vehicle sales for October, expressing concerns about a growing inventory of passenger vehicles (PV). The Federation of Automobile Dealers Association (FADA) disclosed that the PV segment’s average inventory, which reflects the time it takes to sell a unit, reached an all-time high, ranging from 63 to 66 days.
FADA President Manish Raj Singhania warned that if this inventory is not cleared during the Diwali festival, when Indians typically make significant purchases, it could adversely affect automobile retailers. He added that year-end discounts and model changes could further burden dealers with the need for aggressive discounting to move these vehicles.
Factors like high inflation and India’s weakest monsoon since 2018 have made vehicles less affordable for rural populations. Entry-level vehicles from prominent companies like Maruti Suzuki, Tata Motors, and Kia Corp were the main contributors to the inventory build-up, while demand for sports utility vehicles remained strong.
FADA has advised automakers, including Maruti, to implement more aggressive sales strategies and adjust vehicle dispatches. Singhania stressed that manufacturers should refocus their production on models with higher demand instead of pushing specific models that aren’t selling well.
In October, retail sales in the PV segment declined by 1.4%, with 353,990 units sold compared to the previous year, as reported by FADA. The industry is pinning its hopes on Diwali and the harvest season to stimulate demand, with an expected 10%-15% rise in November retail sales, particularly in the three-wheelers and two-wheelers segments.
Singhania pointed out, “Agricultural produce will start coming in November, and the government has increased the minimum selling price of produce – all of this will ensure that money finally gets in the hands of farmers.”
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