Auto Inventory Remains Elevated As Sales Fail To Pick Up In April

Retail sales of automobiles failed to pick up and inventory levels remained elevated in April as the slowdown in demand continued in the seasonally strong month.

Registrations for commercial vehicles slumped 16 percent last month compared with the year-ago period, according to the data released by Federation of Automobile Dealers Associations. Two-wheeler and passenger vehicle registrations were down nearly 9 percent and 2 percent, respectively.

The industry has been struggling to push up sales since the festival season last year. Increased upfront insurance costs and higher fuel prices kept buyers away. Year-end discounts, too, failed to lift demand, forcing automakers to cut production as inventory piled up. Car and two-wheeler makers expect the slowdown to continue till September as sales fell in April, usually when demand picks up because of weddings and festive buying to mark Gudi Padwa and Baisakhi.

Inventory levels for passenger vehicle and two-wheelers, which eased in March from their peaks in February, remained unchanged last month, according to FADA. Commercial inventory, however, rose by 5 days.

• Passenger vehicles: 40-45 days; unchanged month-on-month
• Two-wheelers: 45-50 days, unchanged month-on-month
• Commercial vehicles: 45-50 days from 40-45 days in March

“The month of April ended on a negative note,” Ashish Harsharaj Kale, president at the association, said in a statement. The near-term outlook continues to be negative to neutral without any immediate positive triggers that could affect retail sales, the statement said.

With the fall in sales, inventory levels continue to remain high and requires further correction than in recent months as it puts extra pressure on dealers, it said. Most dealers, according to the association, feel the current sentiments for the auto industry are bad.