FADA Flags Concerns On Dealer Stocks In Festive Season

Srinjoy Bal
06 Nov 2023
12:34 PM
2 Min Read

The dealer body is worried that if sales do not pick up during Diwali, dealers could be left grappling with huge unsold stocks.


Even while vehicle sales across most categories are brisk, the Federation of Automobile Dealers Associations (FADA) believes that the remainder of the fiscal could be a rollercoaster of sorts.

The good news is that the festive buying mood along with the harvest season (especially paddy) will be an impetus for two-wheeler sales along with attractive finance schemes and positive customer sentiment towards electrification. Commercial vehicles, likewise, are looking at a strong November thanks to construction activities and the like.

Ironically, it is the top-performing passenger vehicle segment that is going through a tricky phase. While the festive season will see a spurt in bookings, the shadow of year-end discounts looms large. The other area of concern is the high inventory level of 63-66 days.

If Diwali sales are tepid, the weight of unsold stock could lead to significant dealer distress and justify FADA's concerns about industry-wide repercussions. Immediate and decisive action is imperative to counter the risk of a financial squeeze.

The alarm bells began ringing in October when auto retails fell by 8% to 2.12 million units. Manish Raj Singhania, President, FADA, said the month began under the shadow of the inauspicious shradh period which lasted till the 14th. In this backdrop, a year-on-year comparison may not accurately reflect the actual sales trajectory.

Navratri Retails

Every segment, except two-wheelers and passenger vehicles, saw a significant jump. Though the former fell by 12.6% to 1.5 million, FADA chose to see the silver lining where Navratri retails were up by 21.7%. Singhania said this period, as well as the whole of October, saw positive trends buoyed by festive cheer and stronger rural demand.

Enhanced availability of models, especially those in high demand from the previous year, along with better financial schemes contributed to a solid market momentum. States going into elections also injected optimism into the market leading to an increase in government spending and improved liquidity.

Despite a shift in festival dates, with Diwali moving to November, the anticipation of the festive season stimulated purchase intent and dealers reported good stock preparation and robust ground efforts. This led to an uptick in sales figures, showcasing a resilient and adaptive market, added Singhania.

PV sales fell 1.36% YoY to 353,990 units while Navratri saw an increase in retails by 6.51% to 140,082 units. According to him, the segment navigated a complex landscape marked by both enthusiasm and caution.

During Navratri, despite regional variability, the industry saw a surge in bookings thanks to compelling new models, particularly SUVs, and attractive consumer offers. However, the impact of local elections and market saturation meant that the festive spirit didn't translate uniformly into sales across all regions.

On the positive side, three-wheelers, tractor and commercial vehicles were up 45.63%, 6.15% and 10.26% from October 2022. The FADA chief said the 3W segment continued to do well in Navratri due to competitive finance options and a significant rise in e-rickshaws.

In the CV space, light and small trucks did well as a result of infrastructure development activities and vehicle replacements. Healthy demand was seen in segments like cement, iron ore and coal transport.

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Maruti Posts Record Oct Sales, Remains Optimistic About Rural

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