Car dealer inventories pile up

FADA initiates talks with OEMs on recalibrating production plans

- SOHINI DAS

Even as retail sales of passenger vehicles (PVS) grew 4 per cent year-on-year (Y-o-Y) in May, inventory levels have risen to 40-45 days, according to dealer sources.

Dealers have initiated talks with carmakers on recalibrating production plans in order to get models for which there is greater demand.

"This could mean a drop in volumes for original equipment makers (OEMs) for a few months. But we have initiated talks with OEMs on this. Since interest rates are high, any inventory beyond 21 days pinches the dealer," said Manish Raj Singhania, president, Federation of Automobile Dealers Associations (FADA).

According to the FADA data, inventory days for PVS have been inching up slowly, from 37-39 days in March to 39-41 days in April and 40-45 days in May. PV retail sales in April were down by 1 per cent Y-o-Y after growing for eight months.

Singhania said dealers were concerned about the increasing PV stocks. "It is a tale of two cities-dealers have healthy order books also, with wait periods ranging from two months to one year. On the other hand, some models are getting piled up at dealerships-customers are not getting the right vehicle at the right time."