With the stocks of passenger vehicles (PVs) piling up to more than 7 lakh units, companies need to manage their inventory levels and clear them at the earliest in the new year, said Federation of Automobile Dealers Associations (FADA) on Friday.

“In passenger vehicles, at the beginning of December, all India stock was close to 7-7.50 lakh vehicles, and that is 60-64 days’ of built-up stock, and now it all depends on how much will be cleared by the first week of January. Attention is also drawn to the challenges faced by dealerships, encompassing issues such as inventory management, especially in the PV segment, which is currently at all-time high,” Manish Raj Singhania, President, FADA, told businessline.

He said normally from the last week of December, dealers start getting vehicles for the next year. “But this time, I don’t think any manufacturer has started billing next year’s vehicles, so that means they are also carrying stocks of this year. No original equipment manufacturer has started billing vehicles which can be sold in 2024,” said Singhania.

However, according to Shashank Srivastava, Senior Executive Officer, Marketing and Sales, Maruti Suzuki India, PV retail sales in December should cross 4.30 lakh units, the highest-ever in the history of automobile sales, and could help clear some inventories.

“Wholesales are expected to do around 2,85,000 units in December, retail sales should cross 4.30 lakh units (the highest ever) during the month,” he said.

According to Srivastava, the months following January/February saw have the highest-ever sales, and December will probably be the highest ever. “December last year was 2.75 lakh units, the highest for December so far has been 2.76 lakh units, which was in 2021, but this year, it should be around 2.85 lakh units. So, it should be the best-ever December. That’s unique that all the 12 months have been the highest ever,” he added.

But it will be less than the wholesales in November, where the total PV sales closed at 2,88,062 units. But industry veterans say that it is normal every year as customers await for the new registration year, for a better resale value later. And, that is why companies announce heavy discounts during November/ December and also announce for price hikes from January onwards, every year.

“December wholesales are always less than November so nothing special about it. The correct way to assess the market is December 2023 sales vs December 2022 sales. That will reflect the true market situation...industry’s December’23 wholesales should be three to four per cent higher than December’22,” Tarun Garg, Chief Operating Officer at Hyundai Motor India told businessline.

According to analysts, demand momentum remains favourable for utility vehicles (UVs), but the entry-level portfolio for PVs is not showing any signs of improvement.

“OEMs have aligned their production with market demand with a focus on UVs. Waiting periods for key UVs like XUV700/ ScorpioN (Mahindra & Mahindra) now stand at around two-three months (6-8 months for top-end variants) as M&M is now working in three shifts to clear the pending order backlog. Discounts for Maruti Suzuki India (MSIL’s) lower-end variants have risen 40-45 per cent year-on-year,” said Motilal Oswal Financial Services.

MSIL has its routine plant maintenance shutdown for one week starting from December 24, which would keep wholesales in check. Inventory levels for MSIL stand at 35-40 days largely due to higher stock of lower-end segments, it added.

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