With automobile original equipment manufacturers (OEMs) set to increase vehicle prices starting in January, dealers are anticipating a reduction in passenger vehicle inventory levels in December.

Dealers have stated that they have started receiving enquiries and booking confirmations from consumers for December.

“The price increases will support retail sales throughout December. Consumers are likely to book their vehicles this month. If manufacturers also reduce wholesale supplies, passenger vehicle inventory levels will decline in December. However, the increase in vehicle prices may not sustain in the long run,” said C S Vigneshwar, President, Federation of Automobile Dealers Associations (FADA), to businessline.

Passenger vehicle inventory levels in November stood at 65 days of sales. Earlier, FADA had flagged an all-time high inventory of 80–85 days in October, with dealers across the nation holding 7.9 lakh vehicles worth ₹79,000 crore in stock. The association had urged the Reserve Bank of India to issue strict guidelines on funding to mitigate risks faced by automobile dealers.

Experts state that the increase in vehicle prices will not significantly impact the demand for passenger vehicles.

“Automakers generally increase prices at the start of the calendar year to offset factors such as rising operational costs due to inflationary pressures and higher commodity prices. The recent price hikes announced by various automakers are for the same reason. It must be noted that there are already substantial discounts available across a variety of models in the passenger vehicle industry, with the industry focused on reducing inventory levels,” said Rohan Kanwar Gupta, Vice President & Sector Head - Corporate Ratings, ICRA Limited. 

Maruti Suzuki India Limited (MSIL), Mahindra & Mahindra, Tata Motors Limited, TVS Motor Company, Hyundai Motor India, and Kia India have announced price hikes for vehicles effective January 2025.

MSIL will implement a price hike of up to 4 per cent. Tata Motors, M&M and JSW Motor India will increase prices by up to 3 per cent, while Kia India will raise prices by up to 2 per cent.

Published on December 10, 2024