In the fiscal year 2018-19, inventory days nearing 70 days resulted in the shuttering of approximately 282 passenger vehicle dealerships. As of the latest data available, passenger vehicle (PV) wholesales in July 2024 declined by 2.5% to 341,510 units. This drop is attributed to original equipment manufacturers (OEMs) adjusting their dispatches due to high unsold inventory at dealer levels. Conversely, three-wheeler sales rose by 5% to 59,073 units, and two-wheeler sales increased by 12.5% to 1,441,694 units.
SIAM Director General Rajesh Menon noted that three-wheeler sales are nearing their 2018-19 peak. SIAM President Vinod Aggarwal acknowledged the robust performance of the two-wheeler and three-wheeler segments but highlighted a decline in passenger and commercial vehicle sales for July 2024 compared to the previous year. He suggested that above-average rainfall and the forthcoming festive season could spur short-term growth, while fiscal policies supporting infrastructure and rural development should benefit the auto sector in the medium term.
Analysts predict a modest 0.8% growth in PV sales for FY25. Ravi Bhatia, President and Director of Jato Dynamics, indicated that after a substantial 26.8% year-on-year growth in FY23, the growth rate slowed to 8.7% in FY24, with a mere 0.8% projected for FY25. Bhatia emphasized the need for automakers and dealers to adapt their strategies to this cooling market by focusing on efficiency, innovation, and value propositions.
The Society of Indian Automobile Manufacturers (SIAM) plans to address the escalating PV inventory crisis in its upcoming executive committee meeting. The Federation of Automobile Dealers Association (FADA) has expressed concerns over the financial burdens posed by high inventory levels. Currently, inventory days have surged to 67-72 days, valuing stock at approximately Rs 73,000 crore, up from 50-55 days worth Rs 49,833 crore in July 2023. This inventory pileup is reminiscent of the 2018-19 scenario that led to numerous dealership closures.
Original Story https://www.business-standard.com/industry/auto/passenger-vehicle-wholesales-fall-2-5-in-july-as-retail-inventory-piles-up-124081400777_1.html
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