By Utkarsh Hathi | August 23, 2024

Cars will be cheaper during the festival season as auto manufacturers and dealers will offer discounts to clear rising inventory.

Dealers will crack under the pressure if measures are not taken by Original Equipment Manufacturers (OEMs) to control the rise in inventory,” said Saharsh Damani, Chief Executive Officer (CEO) of the Federation of Automobile Dealers Association.

The inventory levels amount to Rs 73,000 crore of stock as per the press release of FADA. 

Press release by the Society of Indian Automobile Manufacturers In July said that the passenger vehicle segment declined by 2.5% compared to July 2023, posting sales of about 3.42 lakh units. Passenger vehicle sales declined by 6.77% year-on-year and 7.18% month-on-month in June. 

Industry experts attribute lower sales in the first quarter to increased heat-wave, delayed monsoon, and general elections. Major manufacturers Maruti Suzuki India Limited, Tata Motors, and Mahindra & Mahindra reported the challenge with sales of passenger vehicles in the earnings call for the first quarter with investors.

FADA reported growth of 10.18% year-on-year for passenger vehicle sales, which is not enough to offset the inventory pile up. 

“We are offering above Rs 50,000 in discount for each car but people are expecting more discounts and postponing the purchase of cars,” said Srikanth Addla, General Manager of Varun Motors. The dealership sells about 1,72,000 units annually across the states of Andhra Pradesh, Telangana, and Karnataka and Tamil Nadu.

“Increased discounts from manufacturers and dealers are expected in the festival season to reduce the inventory,” said Abhishek Jain, an analyst with Dolat Capital.

Emails sent to Maruti Suzuki India Limited, Tata Motors and Mahindra & Mahindra did not elicit a response. 

Dealers are expecting good sales in festive season provided the monsoon does not go
haywire and banks continue to provide attractive offers, said Damani.