Car Inventory Surges To All-Time High As Retail Sales Slump Nearly 20%

Dealerships are saddled with all-time high inventory as carmakers continue to pile on dispatches ahead of the crucial festive season, despite a sales slowdown.

Retail sales in October 2024 can see a boost as both Dussehra and Diwali are in the same month, but record-high car inventory is a risk for both original equipment manufacturers and dealerships if demand doesn’t meet expectations, FADA said. Heavy discounts and offers to clear the backlog can also impact dealer profitability. 

“While the festive season presents an opportunity for recovery, the high stakes in October make it crucial for dealers and OEMs to clear existing inventory,” FADA said in the release. “Strategic inventory management and targeted festive promotions are key to capitalising on the expected surge in demand and stabilising market conditions.”

To be sure, carmakers are recalibrating dispatches to match demand.

In September, India’s three largest carmakers—Maruti Suzuki India Ltd., Hyundai Motor India Ltd. and Tata Motors Ltd.—shipped up to 10% fewer units to dealerships. India’s largest carmaker, Maruti Suzuki, said its inventory levels have declined from 36 days as on 31 August 2024 to one month as on 31 September.

“[We] can’t compare (September sales) with last year due to the Shraadh period,” Partho Banerjee, head of sales and marketing at Maruti Suzuki, said during a sales call on Oct. 1. The company, according to him, is focusing more on VAHAN data now to assess the demand on the ground.

Still, FADA has now urged the automakers to take immediate corrective measures to avoid a financial setback. The dealer lobby has also called on the Reserve Bank of India to issue an advisory to banks, mandating stricter channel funding policy based only on dealer consent and on actual collateral.

“This is the final opportunity for carmakers to recalibrate and support market recovery, before it’s too late,” Vigneshwar said in the statement.