An analysis of the data from the Society of Indian Automobile Manufacturers (Siam) and the Federation of Automobile Dealers Associations (Fada) shows that the gap between wholesale and retail registrations narrowed 45 per cent year-on-year (Y-o-Y) in September, suggesting a stronger absorption of vehicles ahead of Dhanteras and Diwali.
Automakers dispatched 454,574 vehicles to dealers in September while retail registrations stood at 427,213 units, leaving a gap of 27,361.
In September last year, the corresponding gap was considerably wider at 49,956, with wholesale registrations of 373,347 units and retail of 323,391. Retail registrations grew 32.1 per cent Y-o-Y in September, outpacing the 21.8 per cent increase in manufacturer dispatches.
The trend is also reflected in dealers’ inventories. According to Fada, vehicle stocks stood at 43-45 days at the end of September, as against around 60 days a year earlier. Inventories, however, increased from 38-40 days in August as dealers stocked up ahead of the festival season.
Sai Giridhar, president of Fada, said an increase in inventories was a healthy seasonal development rather than cause for concern, given the strong booking pipeline and customer enquiries. “This year, inventories are not a concern,” Giridhar said, adding that stock levels had been well below 30 days earlier.
The subsequent increase, he explained, was intended to ensure adequate vehicle availability during the festival period.
Giridhar added that the situation was different last year, when most manufacturer dispatches took place after September 22 following the reduction in rates of goods and services tax and the abolition of the compensation cess. Inventories declined sharply in October as pentup demand translated into record deliveries.
Automakers are also stepping up production to meet festival demand, although stock availability varies across manufacturers.Maruti Suzuki had more than 200,000 pending bookings and just 17 days of dealer inventories as of October 1. The company is ramping up production at its Kharkhoda plant. Hyundai Motor India, meanwhile, has built four-five weeks of dealer inventories.
According to dealer sources, automakers are offering maximum benefits ranging from around ₹25,000 to over ₹1.5 lakh on select models and variants. These include cash discounts, exchange facilities, bonuses on scrapping, and loyalty benefits.
Anurag Singh, managing director of advisory firm Primus Partners, said strong sales had helped keep inventories in check, while the festival demand outlook remained promising. “Sales have been good, so inventory levels are in control. The demand is also promising. I see inventory levels to be in control for the near term, and also most customers are likely to get delivery,” Singh said. However, he said inventories could rise quickly if sales weakened for one or two months.
Dealer sentiment also remains positive. Fada’s September survey showed that 75.57 per cent of respondents expected sales growth in October, as against 67.09 per cent in the previous month’s survey. Another 19.46 per cent expected flat sales, while 4.98 per cent anticipated a decline.
The timing of the festivals will be important in assessing how quickly inventories normalise. Last year, both Dussehra and Diwali fell in October. This year, Dussehra is on October 20 and Diwali on November 8, spreading festive deliveries across October and November.
With the retail growth rate outpacing wholesale in September and dealerships reporting healthy bookings, the seasonal stock buildup is expected to ease after the festival period.
However, sustaining demand beyond Diwali will be critical in preventing inventories from rising again.
