Auto Inventory Declines By Nearly Half In July
The fall was mainly due to passenger cars and commercial vehicles where retail sales exceeded the aggregate factory sales.
Inventory levels at dealerships dropped by nearly half in July due to destocking of cars and commercial vehicles amid production cuts by automakers.
The auto industry’s net inventory fell to 160,848 units in July compared to 303,405 units in the previous month. This was mainly led by passenger cars and commercial vehicles where retail sales exceeded the aggregate factory sales.
The inventory trend is based on the difference between wholesales provided by the Society for Indian Automobile Manufacturers and retail sales based on vehicle registrations with regional transport offices.
Wholesales—units moving out of the factory gate—for cars, scooters, motorbikes and trucks declined 18.7 percent year-on-year in July, according to the data collated from the SIAM. Wholesales of cars fell 31 percent in the month whereas for two-wheelers it fell 17 percent.
The wholesales-to-retail volumes ratio for the two-wheeler category showed dip in July after it edged up in June. The ratio, however, remained higher than the auto industry.
The ratio represents the proportion of retail sales to factory sales. A ratio greater than 1 represents inventory buildup and a ratio under 1 represents a destocking trend where the dealer sells more units than what it gets from the manufacturer. The ratio had declined in December and March as dealers pared stock at the end of calendar and fiscal years.
Passenger car inventory showed the sharpest dip in three months in July. Inventory levels of passenger vehicles are lower than the industry average. That’s because makers of cars and utility vehicles cut output, pulling down the wholesale-to-retail sales ratio below 1, according to the data. Which means registrations outpaced the number of units moving out of the factory gate.
Commercial vehicle inventory is the lowest since October 2017 as dealerships witnessed destocking.
While the inventory levels of three-wheelers marginally declined in July, they were higher than May. The wholesale-retail ratio for the category was a little over 1, suggesting that monthly retail demand is as good as shipments from the factory.