Car dealers sit on ₹52k cr stock as sales slow, inventories hit record high

Business Standard

a day ago

Car dealerships in India are facing mounting pressure as unsold vehicle inventory has reached an all-time high of ₹51,000–₹52,000 crore in value terms. This sharp rise comes despite a year-long trend of muted retail demand, according to a report by The Economic Times.
The current stock level by volume — estimated at 440,000 units or 34-38 days of inventory — is only slightly below last year's Diwali peak of 40-45 days. However, the sharp increase in vehicle prices and gradual stock build-up has pushed the total value to unprecedented levels.
The Federation of Automobile Dealers Associations (FADA) has pegged the inventory even higher, estimating 52-53 days of stock at dealerships. This growing mismatch between wholesale dispatches and retail sales has raised concerns over working capital stress for dealers, many of whom are struggling with stock that remains unsold for extended periods, The Economic Times reported.
Retail sales slump despite wholesale push
Retail car sales in May stood at 302,214 units — a 3.14 per cent decline compared to the same month last year. The decline in monthly volumes marked the slowest growth in eight months and the lowest monthly figure so far in the current calendar year. Cars have remained in dealer yards for over 50 days on average for nearly 14 consecutive months — more than double the industry norm of 21 days, noted Vigneshwar, a dealer representative, the news report mentioned.
Despite concerns raised by dealers, major carmakers such as Hyundai and Maruti Suzuki maintain that their inventory levels remain within acceptable limits. Hyundai Motor India's COO Tarun Garg said the company is maintaining a 'healthy inventory level of four weeks' across its dealership network, similar to the same period last year.
High demand, controlled stock levels
Partho Banerjee, head of sales and marketing at Maruti Suzuki India, echoed this view, claiming an improvement over last year. 'Our inventory levels are much better than the previous year,' he said during a monthly sales call on June 2, adding that Maruti's inventory stood at around 35 days.
Some specific models continue to see strong demand, with waiting lists in place. These include Maruti's Brezza and Ertiga, and Mahindra's Thar, Thar Roxx, and Scorpio-N. Select variants of Toyota's Hyryder and Hycross are also in high demand, with waiting periods ranging from four to ten weeks, according to a note by Nomura.