Pile up. Passenger vehicle inventory increases to 49 days: FADA

With dip in sales of entry-level vehicles and inflationary pressures, the passenger vehicle inventories touched 49 days in June.

According to the Federation of Automobile Dealers Association (FADA), monthly statistics passenger vehicle inventories in June were between 45-49 days whereas the inventories of two-wheelers were between 20-25 days.

In May, the passenger vehicle inventory was up to 45 days while the two-wheeler inventory was up to 20 days. 

In April, the passenger vehicle inventory was at 41 days while the two-wheeler inventory was 15 days. 

The inventory pile up with dealers is despite the OEMs offering 8 to 10 per cent discounts. The entry-level car segment dip and pressure on margins with first-time buyers holding on to vehicle purchases are attributed to the inventory pile-up. 

Manish Raj Singhania, President, FADA, said, “With dealers noting sporadic supplies of popular models and ageing product concerns of slow-moving variants, the segment still experienced an uptick in demand for new models and anticipates rural sales to pick up the further pace. The dealers navigate inventory pressures from OEMs and demand-supply mismatches, impacting profitability. However, the anticipation of a boost from the upcoming festive season at the end-August offers a hopeful outlook.”

Further, the body stated that it commends Maruti Suzuki’s swift action to facilitate the clearance of slow-moving model stockpiles by underwriting dealer and interest costs. 

businessline had earlier reported that FADA had asked the OEM to monitor their increase in manufacturing across passenger vehicles. The body had warned that vehicle sales would further dip if the monsoon were insufficient this year.