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Passenger vehicle inventory levels are expected to decrease substantially with an uptick in automobile sales. Bumper discounts offered by Original Equipment Manufacturers (OEMs) clubbed with offers from dealers have aided in the increase in car sales during the festival season.
At the start of the season, passenger vehicle inventory hit an all-time high standing at 80-85 days with over 7.9 lakh vehicles available with dealers valued at ₹79,000 crore.
“A major contributor to the uptick in automobile sales during the festival season has been the discounts offered by OEMs and offers of accessories by automobile dealers. As a result, the passenger vehicle inventory levels have reduced,” said an industry insider.
OEMs were offering discounts in the range of ₹50,000-5,00,000 during the festival season while automobile dealers were giving offers on accessories.
“The sales during the festival season have been very promising. Across the country, automobile dealers have registered an uptick in sales. We are expecting this momentum to continue throughout November,” CS Vigneshwar, President, FADA, told businessline.
Earlier, the Federation Of Automobile Dealers Association (FADA) had approached the Society of Indian Automobile Manufacturers (SIAM) to assist in regularising the vehicle stocks and later urged the Reserve Bank of India to issue strict guidelines on funding to mitigate the risk automobile dealers were facing due to high inventory levels.
Credit rating agency Crisil has forecasted automobile dealers’ revenue growth to slow down between 7 and 9 per cent this fiscal. The agency pointed out that higher discounts and offers by OEMs will bring down dealer profitability.
“We expect inventory to ease a bit in the second half as sales pick up in the festival season amid higher discounts and offers. Yet, it will end higher than normative levels this fiscal, too,” mentions the Crisil report.
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Published on November 4, 2024
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