Retail Auto Sales In India Rise After Three Months Amid Swollen Inventory
The pile of unsold stock at dealerships has swollen to an unprecedented 67–72 days and is now worth Rs 73,000 crore.
India's retail auto sales surged in July after three months of decline, in a reprieve to dealers in the world's third largest automotive industry. However, the growth comes with a key overhang of inventory.
Retail car sales rose 10% to 3.2 lakh units last month in comparison to approximately 2.91 lakh units in the year-ago period. Retail two-wheeler sales increased 17% to approximately 14.4 lakh units, according to the data put out by the Federation of Automobile Dealers Associations on Monday.
Retail auto sales is calculated using the vehicle registration data on the government's Vahan portal.
"Dealers reported benefits from good product availability, attractive schemes and a wider range of products," CS Vigneshwar, vice president of FADA, said. "Some dealers managed to sustain sales through promotions and incremental discounts."
Retail Auto Sales In July 2024: Key Highlights
Four-wheeler sales up 10.18% YoY to 3,20,129 units.
Three-wheeler sales up 12.88% to 1,10,497 units.
Two-wheeler sales up 17.17% to 14,43,463 units.
Tractor sales down 11.95% to 79,970 units.
Sales of truck and buses up 13.5% to 80,057 units.
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The pile of unsold stock at dealerships has swollen to an unprecedented 67–72 days and is now worth Rs 73,000 crore. That is a substantial risk for dealers across the spectrum. Generally, unsold stock of 32–35 days is considered normal.
"FADA urges PV OEMs to be vigilant about potential dealer failures due to these high inventory levels," Vigneshwar said. "It is also crucial for the Reserve Bank of India to mandate financial institutions to implement stringent checks before releasing inventory funding, preferably requiring dealer consent or collaterals to prevent the escalation of NPAs."
