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Business News/ Industry / Manufacturing/  Passenger vehicle makers grapple with inventory woes
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Passenger vehicle makers grapple with inventory woes

Wedding and festive seasons push two-wheeler registrations to record levels in November; commercial vehicle sales remain subdued

Two-wheeler registrations were at 2.247 million units in November, surpassing the previous high of 2.07 million in March 2020. (Hindustan Times)Premium
Two-wheeler registrations were at 2.247 million units in November, surpassing the previous high of 2.07 million in March 2020. (Hindustan Times)

Two-wheeler registrations reached record levels for a single month in November on the back of increasing liquidity and robust buying during the festive and wedding seasons. According to data released by automotive dealers body, the Federation of Automobile Dealers’ Associations (Fada), on Wednesday, two-wheeler registration was at 2.247 million units, surpassing the previous high of 2.07 million in March 2020, just ahead of the BS-VI changeover.

This signifies a reversal in fortunes for a segment which has been struggling for many quarters since the outbreak of covid, especially for entry-level vehicles.

Fada said the two-wheeler category is poised to benefit from a liquidity boost in the near term, particularly in agricultural regions, as well as the ongoing marriage season.

Sales are expected to be fuelled by around 3.8 million weddings. However, challenges for the segment persist as “severe weather conditions impacting rabi cultivation may affect rural incomes, potentially dampening sales", it said.

For commercial vehicles, however, November was “challenging", Fada said, as sentiment remained subdued amid delays in delivery, and unseasonal rainfall in some parts India.

Commercial vehicle registrations in November clocked 84,586 units compared to 86,150 units a year-ago, down 1.82%. But a recovery is in sight. “The CV category is expected to see some recovery, driven by renewed business activities post-elections and positive movements in key sectors such as cement and coal. Backlogs in orders might also contribute to a sales boost," Fada said.

On the other hand, despite a record festive sales, passenger vehicle inventories remain at over 60 days, leading to calls for production rationalization and higher discounts in December.

“November this year witnessed a strong surge in the PV category, primarily fuelled by Deepawali and the launch of new and appealing models. Improved supply chains coupled with new launches, effectively catered to the festive demand, marking the peak point in sales," said Manish Raj Singhania, president, Fada.

“However, the period following the festivities saw a noticeable slowdown, coupled with a critical challenge of slow-moving inventory due to a mismatch in demand and supply which is still not resolved. This issue casts a shadow over the otherwise positive trends, highlighting the need for strategic adjustments in inventory management."

Passenger vehicle registrations at 3,60,431 units grew 17% over November 2022, far higher than wholesale numbers, which were up 3.9% from a year ago in November.

Pace of production growth in November, however, was slower compared to October (15.9%) as retail demand surged ahead of production, according to monthly sales data reported by auto firms.

This indicates that automakers have taken measures to manage high inventory levels by rationalizing factory-gate dispatches ahead of New Year.

“The industry’s stock levels, because of higher retail than wholesale this month, has come down a bit from 335,000 to 330,200 units estimated at the end of November. However, at 30-35 days inventory, stocks in the channel were on the higher side and is an area of concern," Shashank Srivastava, Maruti Suzuki’s senior executive director, said. This will prompt lower wholesales in December, he added.

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ABOUT THE AUTHOR
Alisha Sachdev
Alisha Sachdev is an assistant editor with Mint based in Delhi. She reports on the auto and mobility sector, with a special focus on emerging clean mobility technologies. She also focusses on developing multimedia properties for Mint and currently hosts the 'In A Minute' series and the Mint Primer podcast. Previously, she has worked with CNBC-TV18 and NDTV.
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Published: 06 Dec 2023, 11:55 PM IST
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