Car dealers in India are staring at an inventory of more than 4.5 lakh units for the month of May, as demand cools off after three years of blockbuster sales. June isn't looking bright either.
“What's being reported is actually conservative. Dealers are actually sitting on 4.5-5 lakh units,” Vinkesh Gulati, chairman (research and academy) at the Federation of Automobile Dealers Associations, told NDTV Profit in a telephone interview.
The market itself has grown to 3.5 lakh units per month, but more than one lakh units lying in a stockyard is unsustainable.
“If inventory levels were up to 4 lakh, we would have been comfortable. But they are at least one lakh more,” Gulati said. “That's not good for buyers and dealers alike, as cost of holding inventory builds up over months.”
In fact, the inventory is already at levels seen in the months preceding the October-November festive season, when carmakers stock dealerships to cater to the incoming demand.
According to Gulati, inventory levels in May are already at more than 40 days, something seen only in the month of September.
Gulati called for paring of production by original equipment manufacturers to align the demand-supply dynamics. “The monthly output is about 3.85 lakh. Dispatches in May are seen at more than 3.5 lakh. That'll only clog the pipeline further.”
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