Inventory levels of cars have reached alarming levels valued at ₹77,800 crore: FADA

The inventory levels of passenger vehicles (PVs) have reached alarming levels, with stock days now stretching to 70-75 days and inventory totalling 7.8 lakh vehicles, valued at an alarming ₹77,800 crore, Federation of Automobile Dealers Associations (FADA) said on Thursday.

• Also read: To clear stocks, car majors ‘calibrate’ dispatches in August

“Rather than responding to the situation, PV manufacturers continue to increase dispatches to dealers on a month-on-month (M-o-M) basis, further exacerbating the issue,” Manish Raj Singhania, President, FADA said in the monthly sales report.

On term outlook, he said, festivals such as Ganesh Chaturthi, Onam and Navratri are expected to uplift consumer sentiment, particularly in urban areas, while favourable rainfall in some regions has improved agricultural prospects, which may boost rural sales post-monsoon.

“While the festive season presents promising growth opportunities, the auto retail market faces several headwinds, particularly from weather-related uncertainties and high inventory levels. Strategic inventory management and targeted marketing efforts will be key to capitalising on the festive period while navigating these challenges effectively,” Singhania said.

On the monthly retail sales performance, he said, while the two-wheeler (2W) and three-wheeler (3W) segments managed to post growth at 6.28 per cent and 1.63 per cent year-on-year (Y-o-Y), respectively, other categories faced significant setbacks.

PV sales declined by 4.53 per cent Y-o-Y, tractor sales dropped by 11.39 per cent and commercial vehicles (CV) saw a 6.05 per cent drop, underscoring the challenges the industry is grappling with, due to these volatile conditions, he added.

The PV sales in August declined to 3,09,053 units in August as compared with 3,23,720 units in August 2023. The 2W sales grew at 13,38,237 units during the month against 12,59,140 units in the corresponding month last year. Three-wheeler sales grew at 1,05,478 units in August as compared with 1,03,782 units in the same month last year.

CV sales declined to 73,253 units against 77,967 units in August 2023, and tractor sales also declined to 65,478 units as compared with 73,892 units in August last year.

The grand total of all categories put together, grew by 2.88 per cent Y-o-Y to 18,91,499 vehicles in August as compared with 18,38,501 units in August 2023, the FADA report added.