Car Demand Declines? Dealers Have Rs 44,000 Crore of Unsold Inventory

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Unsold Inventory
Unsold Inventory

It’s doomsday for car dealers in India, as according to leading media reports, all car dealers across India could be looking at almost 4,00,000 units of unsold inventory, which is valued at approximately Rs 44,000 crore.

This is being blamed on the decline in car sales. According to the data released by SIAM ( Society of Indian Automobile Manufacturers), during FY 2024, the total passenger vehicle sales stood at  42,18,746 units, which resulted in a YOY growth of 8.4% compared to the 38,90,114 vehicles sold from April 2022 to March 2023. However, their has been a recorded decline in passenger vehicle registration noted in the first 2 months of FY 2024–25.

Unsold Inventory
Unsold Inventory

Many blame the ongoing elections, the end of marriage season, and the rising temperature as the main reasons behind this massive slump. Some have also stated that the revised interest rates might have caused this slump. All of these factors combined could result in automakers having around 4 lakh units of unsold inventory by the end of this month, which is valued at about Rs 44,000 crores, also resulting in a 4-year slump.

Unsold Inventory
Unsold Inventory

Now, many carmakers are thinking of orchestrating planned shutdowns along with offering hefty discounts to potential customers to minimise their losses and balance out their stocks. Vinkesh Gulati, Chairman of Research at the Federation of Automobile Dealers Associations (FADA), says that not only has the industry had to contend with lower sales across April and May 2024, but this sluggish trend is also expected to spill over into June 2024. It is also set to extend to the festive season later this year, following which there could be an increase in demand. A favourable election outcome, lower interest rates, new model launches, and predictions of a normal monsoon could stir up passenger vehicle sales. It is also expected that considering piling stocks, dealership discounts, and special consumer incentives through June 2024 could relate to a growth of 15-20%.

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