The Indian automobile industry is facing a glut of unsold passenger cars at dealers surging to 700,000 units valued at $8.70 billion, according to a statement issued by the Federation of Automobile Dealers’ Association (FADA) on Thursday, August 22.
The unprecedented rise in inventories has forced the largest car maker in terms of market share Maruti Suzuki India Limited (MSL) to formally announce a cutback in production.
According to FADA, the inventory-holding period of dealers on average increased from 65-67 days to 70-75 days in July.
According to industry estimates, despite a 7.4 percent increase in passenger car production in the first quarter (April-June) of the fiscal year 2024-25 to 496,000 units, sales (despatch from factory to dealer) were up a marginal 1.2 percent to 427,000 units.
The Indian market is usually a bit slower in the first quarter than in the rest of the year, but this year demand has been slower than expected, especially due to the national elections and adverse weather, including heavy rain and heatwaves, an official at MSIL said.
“As inventories have increased, we are making adjustments. This year, the festival season starts in late August, a little earlier than the previous year, and the higher the demand, the bigger the volume for the whole period becomes,” he said.
“We are currently adjusting production to reduce market stock and are closely monitoring demand trends,” he added.
