An inventory pileup seems to be among the biggest contributors to India’s worst-ever auto slump.
Retail sales at dealerships, measured by vehicle registrations, contracted 4.6 percent in 2019, according to data updated on the transport ministry’s website as of Jan. 17. The data released by automakers’ lobby show factory-gate sales plunged 13.6 percent during the period.
That indicates overstocking at dealerships took several months to clear out. In the face of slowing demand, unsold vehicles with dealers aggravated the slowdown.
Category-wise analysis of the numbers shows that passenger cars and two-wheelers suffered from an inventory overhang. The commercial vehicles sector relies more on pre-orders and hence a better managed sales chain.
Company dispatches of cars and utility vehicles to dealerships got ahead of retail sales in 2017 and 2018. As demand stagnated, inventory piled up, and eventually led to a contraction in wholesales.
Two-wheeler makers also overestimated demand even as retail sales plateaued.
Retail and factory-gate sales of trucks rose in tandem before witnessing a prolonged fall after the new axle-loading norms allowed commercial vehicles to ferry more weight. Slowing consumption in a sputtering economy made matters worse.
RECOMMENDED FOR YOU
POPULAR