Indian automakers must be vigilant about 'alarming' inventory levels: industry body

Invent. levels for PVs in India hit all-time high in Aug. ahead of festive season, alarming trend needing monitoring by automakers. PV inventory avg. 58-63 days, up from 50-55 in July & 30-35 in Aug. last yr. Poor rains could dent demand, lowest monsoon in 8 yrs. Retail sales up 8.6%, PVs 6.5%, 3-wheelers 66%, 2-wheelers 6%. Tractor sales up 13% YoY, but down 18% sequentially. Monsoons, consumer sentiment & competition impacting sales.

Inventory levels for passenger vehicles in India hit an all-time high in August ahead of the festive season, an "alarming" trend that needs vigilant monitoring by automakers, an industry dealers' body said on Tuesday.

The average passenger vehicle (PV) inventory at the end of August ranged from 58-63 days, up from 50-55 days in July and 30-35 days in August last year, the Federation of Automobile Dealers Association (FADA) said.

Higher inventory days indicate dealers are storing vehicles for longer before selling them.

"With anticipation of a good festive season, dealers may incur higher working capital costs for maintaining unsold vehicles," said Himanshu Singh, research analyst at brokerage Prabhudas Lilladher.

India's festive season, which lasts from August till November-end, usually draws maximum vehicle purchases.

"If festive demand falls short of expectations, we could see higher discounting from both OEMs (original equipment manufacturers) as well as dealers to clear inventory," Mr. Singh added.

Analysts also warned about poor rains denting demand, with India poised to experience its lowest monsoon levels in eight years.