The slowdown in passenger vehicle (PV) sales has put auto dealers in great trouble. According to the Federation of Automobile Dealers Association (FADA), the stock of vehicles with auto dealers has reached its all-time high. Dealers have more than 7 lakh vehicles stuck with them, worth a total of Rs 73,000 crore
Auto Industry – Photo : Freepik
Auto sector: The slowdown in passenger vehicle (PV) sales has put auto dealers in great trouble. According to the Federation of Automobile Dealers Association (FADA), the stock of vehicles with auto dealers has reached its all-time high at this time. Dealers have more than 7 lakh vehicles stuck with them, worth a total of Rs 73,000 crore. FADA claims that the stock, which was 65–67 days in early July, has now increased to 70–75 days. This is increasing the pressure on dealers. FADA President Manish Raj Singhania said that this is increasing the pressure on dealers, and hence there is a need to be cautious. He has also appealed to passenger vehicle manufacturing companies to be cautious about possible dealer failure in view of this high level of inventory. “Car companies should reschedule their production as per retail sales figures. They should reduce the number of vehicles dispatched to dealers. Though this reduction cannot happen in a month, the difference between passenger vehicle retail and wholesale figures should be 50,000 to 70,000 units.” Singhania said.
According to him, auto dealers should have an average vehicle stock of 30 days, and in some cases, it can be increased to a week. He said, “Car companies may reduce their dispatch in the coming months, but they can increase it again in late September or early October, given the festive season.” According to FADA data, passenger vehicle sales in India grew 10 percent to 3,20,129 units in July. However, passenger vehicle wholesales declined 2.5 percent year-on-year to 3.41 lakh units in the same month. Singhania said, “If car companies are really interested, they should take care of the health of their dealers. They should bring such promotional schemes that will enable them to bring these vehicles to the market. Also, they should support us on the front of additional costs, which come from keeping the stock of vehicles for a long period of time. If they bear this additional cost, it will not affect the margins of the dealers.” Regarding this, SIAM President Vinod Aggarwal says that all auto manufacturers will work responsibly, keeping in mind the health of their dealers. He hopes that the companies will take the necessary steps soon so that the burden of stock does not fall too much on the dealers. What do the experts say? Industry experts like Ravi Bhatia and Puneet Gupta say that automobile companies increased production in anticipation of strong demand. But now that the market is cooling down, it is becoming difficult to manage the inventory. The increase in interest rates has also put pressure on customers, which has further weakened the demand. But experts believe that this situation may change as the holiday season approaches. It is expected that the stock will improve by October, but for this, the production will also have to be rationalized according to demand.
