Automakers are expected to end May with wholesales or factory despatches to dealers of 340,000-350,000 vehicles, up 4-4.5% from a year earlier. As per dealers, planned shutdowns by some companies will help in moderating production volume and managing inventory.
"Pre-Covid stocks for the industry used to be in the range of 45 days. This has dropped to 2-3 weeks after pandemic. Industry stocks are high," said Hardeep Singh Brar, national sales head at Kia India. He expects sales to rebound after the new government takes charge. "Forecast for monsoons is good. Interest rates are expected to come down later in the year, with inflation under control. Given the high base for the entire year, sales growth is likely to be in low single digits," he said.
The domestic auto industry may end the month with a network stock of around 400,000 vehicles - the highest ever in absolute terms, said an industry executive who didn't wish to be named. "It even surpasses the months preceding the festive season when manufacturers bulk up stock," he said.
Brar expects industry car registrations to fall 10% sequentially in May though the Korean automaker will likely post growth backed by a refreshed product lineup. "We have no plans to adjust our production or dispatches, nor are we considering any discounts. Our products are competitively priced," Brar said. Maruti Suzuki and Hyundai Motor India didn't respond to ET's queries. Vinkesh Gulati, chairman, research, at Federation of Automobile Dealers Associations sees the ongoing "sluggishness to continue in June" and "the festive season, which kicks in October, will be a trigger" for a revival in demand.
"Automakers need to be cognizant and pare production and support with incentive and credit to balance things out," said Gulati. Owing to the high inventory levels, discounts and consumer schemes in June are expected to inch up by 15-20% compared to May, he added. Some carmakers have cautioned of slowing sales and rising inventory during investor calls earlier this month.
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