Kolkata1

The Federation of Automobile Dealers Association (FADA) does not expect the country’s passenger vehicles sales to grow in high single digits for the next financial year as there would be a slow recovery for the industry.

With the car dealers currently grappling with high inventory levels, they are expected to start offering discounts to entice buyers and clear the stockpile.

“Today, we have around 50-52 days of stock. The number is high. The ideal number is 21 days of inventory. Anything above 30-35 days, dealers start losing money because they take inventory and channel funding from banks. So it’s a losing proposition,” FADA CEO Saharsh Damani told businessline on the sidelines of the second edition of Vyapar Bengal Conclave in Kolkata on Tuesday.

“So apart from OEMs, we anticipate some discounts coming in from dealers also, specifically for brands where inventory level is much above the range,” Damani said.

Declining demand

Notably, the country’s automobile retail sales across categories witnessed a drop of 7 per cent year-on-year in February amid declining demand. Passenger vehicle retail sales declined 10 per cent y-o-y in February.

Damani said the passenger vehicle industry is expected to witness a slow recovery and not the “V-shaped kind”.

“April onwards, we may see demand picking up as people will start to see more disposable income in their family (as salaried individuals earning upto ₹12.75 lakh per annum are exempt from paying income tax). The monsoon has to be normal so that overall industry performance is good. This will not be a V-shaped kind of recovery, but it will be a slow one. And I think full potential or full recovery will start happening from Ganesh Chaturthi (August) when the festivities begin,” the FADA CEO said, adding that the association does not see high single digit growth for the passenger vehicle industry for the next fiscal.

Published on March 11, 2025