[Haze]

The passenger vehicle (PV) industry is sitting at an all-time high inventory of 62-67 days. Despite improved product availability and substantial discounts to stimulate demand, market sentiment remains subdued, with extreme heat resulting in 15% fewer showroom walk-ins.

Manish Raj Singhania, president, Federation of Automobile Dealers Association (FADA), said, “The total unsold inventory in the market will be 600,000-650,000 units and their average ticket size should be Rs 9.5 lakh. The last two months itself saw stock get pushed up by 77,000.”

Total wholesale dispatches during June were around 341,000 units, a growth of 4%. Actual retails (vehicle registrations) during the same month, however, were 281,600 units, highlighting the gap between market demand and supplies by manufacturers.


Speaking to the media on June 1, Partho Banerjee, head of sales and marketing, Maruti Suzuki, said, “The increase (in June volumes) came from new model launches from the competition. Inventory is on the higher side.”

To tide over the poor walk-ins in showrooms, Maruti Suzuki dealers were asked to keep their dealerships open well past their usual closing time. In addition, all sales promotion events were conducted during the evening to beat the day-time rise in temperatures.

“Extended working hours were done only in the urban market and this initiative came in very late. They should have started that in May or early June to derive the benefit. And the initiative did not work looking at the sales volumes in June,” Singhania added.

Maruti Suzuki’s retail volumes dropped by 8% during June, higher than the drop witnessed by the industry during the same month. As per FADA data, which is sourced from the Centre-controlled VAHAN portal, the PV segment saw 7% year-on-year drop in sales volumes to 281,566 units.

“Our dealer feedback highlights challenges such as low customer inquiries and postponed purchase decisions. With the festive season still some time away, it is crucial for PV makers to exercise caution. Effective inventory management strategies are essential to mitigate financial strain from high interest costs,” FADA said in a note.

Source: https://www.financialexpress.com/bus...crore-3545426/

[svsantosh]

People holding stock/shares in Automobile industry keep an eye out. Also related to the ancillary companies too.

Google for unsold inventory lying across USA dealers; there are people making money making YouTube videos of the unsold inventory worth a few billions. 1000 BHP Dodge Chargers and Wrangler V8s are collecting dust.

Expecting a jolt/shock to bring back prices to pre-COVID levels. Some one should set the ball rolling and the domino effect should reduce hyper inflated prices.

[Shreyans_Jain]

Car companies have brought this on themselves. The bubble is bursting, market is due for price correction. There is no reason for car prices to anywhere as high as they currently are. I expect to see massive discounts in the upcoming festive season across the board.

[fhdowntheline]

I think the urban salaried consumer is also getting impacted because of relatively low wage hikes and higher household costs. It would be interesting to see how many single people below the age of 30 have the propensity to buy their first cars. My guess is that the number is less than what it used to be earlier.

[anjan_c2007]

It is presumed that nothing other than discounts and offers will click to clear off their unsold inventories. They now need to wait till the onset of the next festival season starting, early October 2024.

The newsreport is alarming, which says that the wholesale dispatches during June were around 341,000 units, a growth of 4%. Actual retails (vehicle registrations) during the same month, however, were 281,600 units, highlighting the 61,600 units gap between market demand and supplies by manufacturers.

Unsold inventories are a slow poison for the financial health of any industry. Memories of the unsold inventories in Chrysler Motors during the late 1970's, with huge and unwanted inventories of car components was about to see the company's downfall. Things were sorted out when the marketing maverick and the top honcho from Ford was made CEO of Chrysler.

Auto companies need to have marketing intelligence departments to foresee the immediate and long term demands and suggest numbers for production as such.

[krishnakumar]

Originally Posted by fhdowntheline

I think the urban salaried consumer is also getting impacted because of relatively low wage hikes and higher household costs.

+1000 to this.

And this is going to be seen everywhere, not just in cars. Call me a bear but I’m really not clear on why there is a bull run literally everywhere. My honest question is this, who is really making money in this country??

Both my wife and I are a salaried employee and we haven’t seen any considerable wage increase in the last 3 years. My last year’s increment was, get this, 0%. Yes. Zero. Not even enough to cover for the inflation for crying out loud. During the same period, expenses have increased at least by 30-40%. Rentals in Bangalore have skyrocketed. Home affordability is also at an all time low. Even a decent sized home around the fringes of Bangalore city costs 2 crores.

I wonder when we will stop worshipping the government and start asking real questions. Media is already sitting on their lap so no one is really asking these questions. But I guess these questions are better asked elsewhere and I don’t want to start an argument here.

The middle class salaried folks are getting squeezed like anything. That is the real reason. Quoting heat wave as a reason is deliberately avoiding the truth.

[shortbread]

Originally Posted by krishnakumar

+1000 to this.

And this is going to be seen everywhere, not just in cars. Call me a bear but I’m really not clear on why there is a bull run literally everywhere. My honest question is this, who is really making money in this country??

The middle class salaried folks are getting squeezed like anything. That is the real reason. Quoting heat wave as a reason is deliberately avoiding the truth.

OFF TOPIC

It's a global phenomenon and the anger is reflected in ballot boxes the world over, one after the other incumbent governments are falling, even the current Indian govt. barely survived.

Inflation has been a killer post covid in every nook and corner of the world, then worsened soon after by a drastic credit crunch as central banks tried to rein on inflation and made borrowing extremely expensive. Suddenly EMIs for a new vehicle or house have become stratospheric.

While all this is happening, the pandemic down time created a new generation of freshly aware investors who started using their savings and more easily available apps to buy stocks and shares. Today the private investor is buoyant and are helping fuel market rallies.

So when will normalcy return, or the feeling of the same? I think in the coming year as inflation cools globally and central banks dial down interest rates, affordability will rise. Albeit in my personal opinion, especially in the West, this rapid rise in interest rates is bound to break something, it's just that we're not aware of it yet.

Mods, apologies for going Off-topic.

[Geo_Ipe]

Originally Posted by Shreyans_Jain

There is no reason for car prices to anywhere as high as they currently are. I expect to see massive discounts in the upcoming festive season across the board.

Maruti has started off with around 3L discounts on the Jimny, right? Agreed that Jimny is a niche product, however Maruti may be eyeing the first mover advantage in the "price drop" segment.

So much for the 12-18 month waiting periods for Toyotas & Mahindras!

[shortbread]

A standoff is brewing between India's no.1 car manufacturer and its dealers, as per a reliable source from a major dealership chain (which he owns in partnership). The company's reluctance to adjust its strategy in the face of inventory buildup is leading to a crisis, as dealers struggle to clear out stock. With volumes taking precedence over market share, it's reminiscent of how the big three American automakers' once operated.

[ashvek3141]

Excellent piece of news !! Just what we consumers need to hear, and the auto industry doesn't. As a few BHPians rightly said, there was too much going on post-COVID and needed a correction.

But the issue is, this reality has hit on the top 2 or maybe 3 manufacturers and the other are still riding high in their dreams. Not long before they too get hit by this reality.

[Acharya]

Somewhere in dark corners of my head, I get sadistic pleasures from seeing this inventory build up and return of discount days. Soon there could be shift in attitude from Take it or Leave it to Customer is the King.

While the discounts are temporary, Industry could do themselves a great favor by leveraging this demand slump, to negotiate & rationalize GST with government.

In last 6-7 years, GST has grown from 80-90 Lakh Cr a month to 180-200L Cr a month. However, govt has shown no inclination to give any relief to GST payers, it's high time this topic is brought to the tables of people who matter in the discussion.

Moreover, Car companies have used every possible opportunity to jack up already inflated prices. Hope some sanity comes back in the market, Auto Industry & Govt should not kill the golden goose, instead of reaping the benefit for long.

[Rajjaiswal92]

I’ll give you some insider information, a friend of mine who owns several dealerships of a very prominent automobile brand has been approaching bankers to increase his funding limits, during the peak of demand and supply gap he was using not more than 25% of his limit. Things have changed starting this year, the usage of the limit kept on increasing and now the condition is such that he has exhausted his limits and need new ones, his yards are full and no buyer in sight.
I can guarantee the automobile bubble will burst by October, massive discounts would be offered, models would be axed and the market will again tip in favour of the buyer.

[ashvek3141]

Originally Posted by Acharya

Somewhere in dark corners of my head, I get sadistic pleasures from seeing this inventory build up and return of discount days. Soon there could be shift in attitude from Take it or Leave it to Customer is the King.

I can feel you buddy, totally! It indeed gives me great pleasure when I read such news.

While the discounts are temporary, Industry could do themselves a great favor by leveraging this demand slump, to negotiate & rationalize GST with government.

In last 6-7 years, GST has grown from 80-90 Lakh Cr a month to 180-200L Cr a month. However, govt has shown no inclination to give any relief to GST payers, it's high time this topic is brought to the tables of people who matter in the discussion.

Moreover, Car companies have used every possible opportunity to jack up already inflated prices. Hope some sanity comes back in the market, Auto Industry & Govt should not kill the golden goose, instead of reaping the benefit for long.

The day is not far, and we can see some reforms coming in from the government. Except such respite in the Road Taxes too. We have already seen UP govt. waving off the RT on Hybrids!

Originally Posted by Rajjaiswal92

I’ll give you some insider information, a friend of mine who owns several dealerships of a very prominent automobile brand has been approaching bankers to increase his funding limits, during the peak of demand and supply gap he was using not more than 25% of his limit. Things have changed starting this year, the usage of the limit kept on increasing and now the condition is such that he has exhausted his limits and need new ones, his yards are full and no buyer in sight.
I can guarantee the automobile bubble will burst by October, massive discounts would be offered, models would be axed and the market will again tip in favour of the buyer.

[microscopic]

At a risk, I'm taking a contrarian view here.

If the inventory is building up and the discounts are going to be back by October, we, as customers, should be ready to buy stocks from older manufacturing batch rather than fresh stocks off the factory floor.

Are we ready to do that?

[DHARM]

Discounts have started coming through M&M offering 1,50,000 to 2,20,000 on AX7 Models

https://www.autocarindia.com/car-new...-2-lakh-432189

Tata Motors too announced discounts across all ranges.

With UP govt announcing revision in Hybrid car taxes sales for Maruti and Toyota will move up as cars will be cheaper up to 3,50,000 thus both Mahindra and Tata will be forced to reduce prices & discounts specific to that region.