The Federation Of Automobile Dealers Association (FADA) are planning to approach financiers asking them to stop overfunding automobile dealers. Dealers have alleged that they have passenger vehicle inventories worth Rs.70,000 crore.<\/p>\n
According to FADA, the passenger vehicle inventory is between 67 and 72 days, the highest recorded in a year. The dealers state that they have not been able to make profits with passenger vehicle inventories beyond 30 days.<\/p>\n
\u201cWe plan to approach financiers to stop overfunding dealers. This is in the interest of the automobile dealers as it is high cost and we have to take measures to reduce the inventory levels. The dealers are not able to rotate stocks in 60 days. We have also approached SIAM to intervene,\u201d said a senior official who did not want to be named.<\/p>\n
The association has also approved the vehicle manufacturers to increase production of the cars in demand.<\/p>\n
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- \nListen: Is high inventory a sign of trouble for India\u2019s passenger vehicle market?<\/b><\/li>\n<\/ul>\n
\u201cThe ideal inventory at the dealer end is up to three lakh vehicles. We are at the lowest point in the industry and the Original Equipment Manufacturers (OEMs) are burdening us. Manufacturers should align their wholesales with retail. Every OEM has three models that are popular among consumers and have a long waiting period. However, the waiting period issue is not addressed by the manufacturers. The OEMs should immediately recalibrate and realign their production to the vehicles that are in demand from the customer\u2019s end,\u201d Manish Raj Singhania, President of FADA had earlier told the businessline<\/i>.\u00a0<\/p>\n
Analysts have flagged a slowdown in the passenger vehicle segment during the year.<\/p>\n
\u201cWe are concerned about slow down in the PV industry, underperformance at its small car segments and over-dependence on the SUV segment,\u201d mentions LKP Securities.<\/p>\n
FADA had earlier written to financiers asking them not to overfund the automobile dealers in November 2023 with passenger vehicle inventories of up to 66 days.<\/p>\n
\nFestival cheer
\n<\/h5>\nWhile the festive season is expected to reduce the inventory levels and Original Equipment Manufacturers (OEM) have started to align vehicle production, the impact on the passenger vehicle industry is expected to continue.\u00a0<\/p>\n
\u201cWe expect the offtake to grow marginally by a lower single digit for the year FY25 considering the pressure on retails and the current inventory situation,\u201d said Hemal Thakkar, Senior Practice Leader & Director of consulting, CRISIL Market Intelligence and Analytics.<\/p>\n