It is believed that the festive season begins in the market with Rakshabandhan. Vehicle manufacturing companies also plan to offer discounts and various attractive offers on their vehicles. But despite the upcoming festive season, the Federation of Automobile Dealers Association (FADA) has announced that a tremendous increase has been observed in the inventory of passenger cars at automobile dealerships across India.
Cars worth Rs 73,000 crore parked at dealerships:
According to the latest reports, the stock at dealerships across the country is constantly increasing. This figure of stock has exceeded 7 lakh units, which is worth about Rs 73,000 crore. That is, these cars are standing in the stockyard of the dealership. This figure is equal to the total sale of vehicles for about two months. With the increase in stock level, some car companies have also slowed down their production.
Car sales fell sharply:
In July, passenger car sales in the Indian market, the world’s third largest auto market, declined for the first time in the last two years. Due to lack of sale of cars, there was a glut of inventory at dealerships, forcing car manufacturers to reduce dispatches (counted as sales) to their channels. During July, sales declined by 2.5% year-on-year and 3,41,000 units of cars were sold across the country this month.
Rising stock due to reduced sales poses a significant risk to dealers, which FADA says has increased from 65-67 days at the beginning of July 2024 to around 70-75 days as of today. According to FADA, dealers currently have around 730,000 unsold vehicles, which is equivalent to about 2 months of sales. However, the Society of Indian Automobile Manufacturers (SIAM) estimates the figure to be around 400,000 units. Until then, automakers can reduce production and expand the sales network for better inventory management.
Why vehicle sales have decreased:
There can be many reasons for the decrease in demand for vehicles. The slow demand started with the Lok Sabha elections this year, while the scorching heat and subsequent heavy rains have also affected car sales. This slowdown in the passenger vehicle segment in the Indian market has put a heavy burden on the dealerships. However, to overcome this, vehicle manufacturers are resorting to discounts along with slowing down production.
Car sales in July:
| Brand | July-24 | July-23 | Difference |
| maruti suzuki | 1,37,436 | 1,52,126 | -9.6% |
| Hyundai | 49,013 | 50,701 | -3.3% |
| Tata Motors | 44,727 | 47,630 | -6.1% |
| Mahindra | 41,623 | 36,205 | 15.0% |
| Toyota | 29,533 | 20,759 | 42.3% |
| Kia | 20,507 | 20,002 | 2.5% |
| Honda | 4,624 | 4,864 | -4.9% |
| MG Motor | 4,572 | 5,012 | -8.8% |
| Volkswagen | 3,407 | 3,814 | -10.7% |
| Reno | 2,832 | 3,607 | -21.5% |
Except Mahindra, Toyota and Kia, most car companies have registered a decline in July-24. Maruti Suzuki’s sales in July have decreased by about 9.65% compared to July last year. Hyundai, Tata Motors and Honda have also registered a decline. Tata Motors’ electric vehicle sales have also seen a huge decline.
In the April-June quarter, sales of electric cars have seen a 7% decline year-on-year. At the same time, sales of Tata Motors, which is called the leader of the EV segment, have fallen by 21% in July. The company has sold a total of 5,027 electric cars in the domestic market in July. Which is almost much less than the 6,329 units sold in July last year.
Maruti Suzuki slows down production:
According to a Business Standard report, the country’s largest carmaker Maruti Suzuki India Limited has reduced the pace of production of cars after a decline in sales. The carmaker said that during the first few months of this current financial year, vehicle sales have been much lower than the production and hence production will have to be adjusted to balance these stocks.
Discount up to Rs 12 lakh on cars:
As we told you, most car companies are currently offering huge discounts on their vehicles. Tata Motors is offering discounts of lakhs of rupees on its Safari, Harrier and even Nexon. Hyundai is also offering discounts on its models like Venue and Exeter this month. Jeep India is offering a discount of Rs 12 lakh on its Grand Cherokee model. Now its starting price has become Rs 68.50 lakh. Earlier its price used to be Rs 80.50 lakh.
In such a situation, when there is a burden of stock on the dealership, it is possible that in the coming time, discounts may be offered on cars at the dealership level to capitalize on the festive season and clear the existing stock. In recent times, many cars like Mahindra Thar Rocks, Tata Curve EV and Citroen Basalt have entered the market. Next month, Tata Motors is also going to announce the prices of Curve (petrol-diesel).