The passenger vehicle inventory in the country has reached an all-time high, now standing at 80 to 85 days. Dealers across the nation currently have 7.9 lakh vehicles, valued at ₹79,000 crore, in stock.
The Federation Of Automobile Dealers Association (FADA) has flagged the high inventories, and has stated that automobile dealers are under financial pressure with increased cash flow challenges.
The association has urged the Reserve Bank of India (RBI) to issue strict guidelines on funding to mitigate the risk faced by automobile dealers.
“Given the critical festive season around the corner, FADA urges OEMs to take immediate corrective measures to avoid a financial setback. FADA also calls on the Reserve Bank of India to issue an advisory to banks, mandating stricter channel funding policies based only on Dealer consent and on actual collateral, to prevent Dealers from facing additional financial pressure due to unsold stock. This is the final opportunity for PV OEMs to recalibrate and support market recovery before it’s too late,” said C S Vigneshwar, FADA President, in a statement.
FADA also stated that the heavy discounts that the OEMs are offering will impact dealer profitability if sales do not pick up during the festive season.
In September, the overall retail sales dropped by 9.26 per cent year-on-year. Passenger vehicle retail sales fell by 18.81 per cent year-on-year, while two-wheeler sales fell by 8.51 per cent. Commercial vehicle sales fell by 10.45 per cent year-on-year.
Previously, the passenger vehicle inventory held by dealers ranged from 67 to 72 days, with between 7 lakh an 7.5 lakh vehicles valued at ₹70,000 crore.