Rising fuel costs and higher rates of interest are keeping buyers away from making car purchases leading to rising stocks at company dealerships. Auto dealers in India have hefty stocks of unsold cars lying in company showrooms. The scenario is more predominant in the North of India due to Shraadh period, a time of the year when making big purchases like property or cars is considered inauspicious.
The situation is further compounded by rising fuel prices, unpredictable rainfall pattern and increased rates of borrowing which has been noted over the past two months. However, from 9th October, the situation could change with the onset of the festive season, a time of the year when car purchases increase significantly.
Leading auto dealers of India’s 5 largest automakers have shown increased inventories. Dealers of Maruti Suzuki India Limited and Mahindra show stocks of about 45 days, as against normal stocks of 25-30 days. The scenario is similar at dealer’s showrooms of Tata Motors and Hyundai Motors with inventories of 35-40 days. This situation is slated to increase as Maruti Suzuki has added a new assembly line of 2.50 lakh vehicles from its production plant in Gujarat while other automakers such as Tata Motors, Mahindra and Hyundai Motors are also said to follow suit in the coming months.
The upcoming festive season could see some positive effects on overall sales in the passenger vehicle segment particularly so due to the new Mahindra Marazzo MPV launched in the country and the new Hyundai Santro being readied for launch in the country later next month. The rise in demand will also depend on factors such as fuel prices and interest rates remaining stable during the festive season.
Hyundai dealers in Rajkot, Gujarat have complained of inventories at a 2 year high of 35-40 days. While the company expected to see 15% growth in retail sales during the year, factors such as bad rainfall, etc saw retail sales increase by just 10%.
While Maruti Suzuki Swift and DZire had long waiting periods, the scenario has changed with the company dealers offering heavy discounts to the tune of Rs 20,000 so as to clear stocks. Hyundai Motors is also eagerly looking ahead to the festive season to note stronger demand particularly due to the new AH2 (Santro) being readied for launch along with the next-generation models of Amaze sedan and CR-V.