Car Dealers Hope For Festive Filip To Sales Even As Rainfall Remains Concern
Elevated inventory levels are creating problems with dealerships, promoting many original equipment manufacturers to realign production with demand.
The problem of rising inventory could deepen for carmakers in India if the festive season fails to bring a demand upsurge, according to Manish Raj Singhania, president, Federation of Automobile Dealers Associations.
The retail car sales—measured as vehicle registration on the VAHAN website—slipped 4.53% on a year-on-year basis to 3.1 lakh units in August. The number was down 3.46% on a sequential basis, FADA said in a statement released on Thursday.
Even though the projections for the upcoming festive season look upbeat, the continuous rains in various parts of the country could disrupt sales, according to Singhania.
“I hope the anticipation of October, where we have the Navratri as well as Diwali festival, falls in place and we have certain inventory corrections, or else dealers will be in a bad place holding inventory after the festivals,” he said.
The Indian Meteorological Department has predicted an above-normal rainfall in September. The continuous downpour has affected the crop season in rural areas, where agriculture is the primary means of life.
“All the things are positive except for rainfall that has been above normal. If you see the rural two-wheeler sentiments, the rains have drastically affected them and we are seeing a sales decline in terms of two-wheeler retail. That’s a point that is worrying to us,” Singhania said.
The elevated inventory levels are creating problems with dealerships, promoting many original equipment manufacturers to realign production with demand.
The FADA president suggested that OEMs should look at the inventory dispatches on a monthly basis to understand the ground situation.
“Say an OEM is retailing 20,000 vehicles and the dispatch is 22,000 or 23,000 vehicles. This will add to the inventory. So this is the situation. They (OEMs) need to understand and realise where they stand in the market and accordingly plan for dispatches,” he said.
Singhania pointed out that though the rising inventory is a concern for the dealers and carmakers, it could bring good news for the customers.
"We are seeing a lot of OEMs come forward with price cuts and discounts. These have increased to an all-time high and it’s a very attractive time for consumers to buy," he said.
