After rising for two straight months, inventory levels at dealerships eased a bit in October as deep discounts during the festive season spurred retail sales of cars and two-wheelers.
The automobile industry's net inventory declined 19 percent over the preceding month to 4.10 lakh units in October. That's similar to the levels seen in February. Net inventory trend represents the difference between wholesale numbers released by the Society for Indian Automobile Manufacturers and retail sales measured by vehicle registrations across the country and disclosed by the Ministry of Roads, Transport and Highways.
The fall in net inventory was led by two-wheelers as stocks at dealerships declined on a better-than-expected festive demand. Stocks of select models of two-wheelers even ran out in a few regions. Inventory of passenger cars, too, fell marginally in October.
That's also reflected in vehicle registrations, a measure of sales at dealerships. The number of new two-wheelers registered rose about 16 percent over the preceding month and 6 percent year-on-year in October. Total vehicle registrations across the country rose 18 percent sequentially in October, the highest in three months.
Production cuts by automakers, too, eased the pressure on dealers. The factory-gate sales across categories, according to data released by SIAM, increased only 8.5 percent sequentially in October and declined 12.76 percent over the last year. While domestic factory-gate sales of two-wheelers fell 14.4 percent year-on-year in October, that of passenger cars marginally rose.
And that indicates the lingering pain among India's automakers since Diwali festival last year. The sales slowdown even forced automakers to layoff contract workers and dealers to shut showrooms. It's also important to note that festivals occurred in November last year, which means companies pushed up stocks at dealerships in October. And though sales picked up this October, they are lower than last year—implying it may be too early to call the blip a recovery.
Wholesales-to-retail volumes ratio for two-wheelers declined to 1.3 in October from 1.43 in September. A ratio above one denotes that companies pushed higher sales to dealers compared with dealers' sales to customers. And a ratio of below one denotes dealers paring inventory as retail sales exceed factory-gate shipments.
The wholesales-to-retail volumes ratio for passenger cars declined marginally to below one in October after rising in September. The ratio fell to 0.99 from 1.05 in September. That means retail sales outpaced units shipped out of factories as carmakers continue to cut production. India's largest carmaker, Maruti Suzuki India Ltd., lowered output for the ninth straight month in October.
The wholesales-to-retail volumes ratio for commercial vehicles was close to 1—the highest in four months—despite production cuts. Total commercial vehicle wholesales fell 23.4 percent over the last year. Volumes, however, rose 14.3 percent month-on-month.
For three wheelers, the ratio stood at 1.10, implying lower retail sales over factory-gate sales. That's despite a rise in retail sales of three-wheelers for the fourth straight month. Factory-gate sales fell 3.6 percent year-on-year and rose 1 percent over last year.
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