Auto Dealers Stare At Historic Inventory Crisis Worth ₹52,000 Crore

Automotive dealerships are facing an unprecedented inventory crisis, with unsold vehicles valued at ₹51,000-₹52,000 crore accumulating across showrooms across the country. This represents the highest inventory value recorded in the industry's history, underlining a growing disconnect between manufacturing output and consumer purchasing patterns.

Current Inventory Levels

The automobile retail sector currently holds 34-38 days worth of stock, including around 440,000 vehicles as of May 2024. While this volume remains slightly below the 40-45 day peak witnessed before last year's Diwali season, the monetary value has reached historic highs due to increased vehicle prices and sustained accumulation over time.

Notably, Federation of Automobile Dealers Associations (FADA) data presents an even more concerning picture, with the agency reporting inventory levels at 52-53 days -- significantly above the industry standard of 21 days.

Wholesale-Retail Gap Widens

The automotive sector recorded marginal year-over-year growth in May, representing the slowest expansion in eight months and the lowest monthly sales volume for 2024. Retail deliveries totalled 302,214 units during the period, marking a 3.14% decline compared to the previous year, while wholesale dispatches continued outpacing actual customer demand.

Manufacturer Perspectives Vs. Ground Reality

Despite widespread dealer concerns, major automakers maintain optimistic inventory assessments. Hyundai Motor India reports maintaining a "healthy inventory level of four weeks" across its dealer network, according to Chief Operating Officer Tarun Garg. 

Maruti Suzuki India's sales and marketing head Partho Banerjee similarly described current inventory levels as "much better than the previous year," citing approximately 35 days of stock, as per ET Auto.

Select Models Buck Industry Trend

Certain vehicle models continue experiencing strong demand, creating waiting periods for customers. Popular models including Maruti's Brezza compact SUV and Ertiga multipurpose vehicle, along with Mahindra's Thar, Thar Roxx, and Scorpio-N variants, maintain customer waiting lists despite the broader inventory crisis.

Toyota's Hyryder and Hycross models also show resilience, with specific variants and colour options requiring four to six weeks and eight to ten weeks respectively for delivery.

Market Outlook 

Despite acknowledging challenging domestic market conditions, key industry bosses express measured optimism about future prospects. The combination of policy support measures and fundamental market strengths provides hope for gradual inventory normalisation and demand recovery in the coming months.