Inventory levels at dealerships rose in September led by two-wheelers as automakers stocked up anticipating higher sales during the ongoing festive season.
The automobile industry’s net inventory rose 23 percent over the previous month to 2.27 lakh units. Inventory levels represent the difference between wholesale numbers released by Society for Indian Automobile Manufacturers and retail sales measured by vehicle registrations across the country and disclosed by the Ministry of Roads, Transport and Highways.
The data may signal a brief respite for the crisis-ridden Indian automobile sector, which looks to overcome its worst slowdown in over 22 years. Auto sales have been declining since Diwali last year, with falling volumes forcing companies to lay off contract workers and dealerships to shut showrooms.
Yet, Rajan Wadhera, president of SIAM, said automakers will continue with production cuts in October, adding any growth in the second half of the year will come at a low base.
Retail registrations rose 8.3 percent over last month in September as automakers pushed sales to dealers going into October, while domestic factory-gate sales data, released by SIAM, indicated a 10 percent rise month-on-month but a 22.4 percent decline over last year.
The rise in inventory was led by two-wheelers with the stock at dealerships rising to a seven-month high.
Wholesales-to-retail volumes ratio for two-wheelers jumped for the third consecutive month in September, rising to 1.24 from 1.22 in August. A ratio above one denotes that companies pushed higher sales to dealers compared with dealers’ sales to customers. And a ratio of below one denotes dealers paring inventory as retail sales exceed factory-gate shipments.
Two-wheeler wholesales, or units coming out of factory gates, rose 9.4 percent over last month in September but declined 22 percent over year-on-year, according to data collated from SIAM.
The wholesales-to-retail volumes ratio for passenger cars category remained below one for the sixth straight month in September—though it rose to 0.88 from 0.82 in August. That means retail sales outpaced units shipped out of factories.
Factory-gate declined 23 percent over last year in September, according to SIAM, even as the volumes rose 13.6 percent month-on-month. Carmakers continued to cut production, allowing dealers to pare stock.
The wholesales-to-retail ratio remained below one for the third consecutive month at 0.80 for trucks. That’s because commercial vehicles witnessed destocking led by production cuts. Total commercial vehicle wholesales fell 39 percent over last year. Volumes, however, rose 12.6 percent month-on-month.
Factory gate sales of three-wheelers fell 3.9 percent year-on-year and rose 12.8 percent over last month. Higher dealer sales pulled the wholesales-to-retail ratio just below one.
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