Alarm Bells Ringing: Auto Inventory Levels Highest In Last 5 Years | V3Cars

08 November 2023
By Mahesh Yadav
0

While interacting with Maruti’s top boss of marketing and sales, we learned that the industry had an inventory of 3.35 lakh units at the beginning of November 2023. Shashank Srivastava also told us that this is the highest inventory level in more than 5 years. The last time we saw inventory levels this high was back in September 2018.

Indian Auto Inventory Levels Highest In 5 Years

To The Moon

After 2 years of increase in demand and, in turn, in the ex-showroom prices, we’re suddenly seeing an influx of discounts this festive season. In 2022, it was very difficult to even expedite the delivery of your favourite vehicle let alone get discounts. Even low-volume cars like the Ignis were seeing healthy demand and received multiple back to back price hikes. For the base variant of the Ignis, the price jump from December 2022 to April 2023 was almost 9%.

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Off The Cliffhanger

This sudden change in the demand and presence of discounts in (almost) all directions feels quite different. We’re now seeing discounts of up to ~Rs. 1.0 lakh on small cars like the Citroen C3. Even their well-priced C3 Aircross is getting similar discounts just weeks after the launch. Move up the food chain and you’ll hear people reporting discounts of up to Rs. 3.50 lakh on XUV400. Some even claim to have received Rs. 9.0 - 10.0 lakh discounts on the Toyota Hilux.

Alarm Bells Ringing

While Mr. Srivastava didn’t sound alarmed by the inventory, he did express concern. Maruti Suzuki are hopeful that the sales during the first half of November should decide the direction for the rest of the calendar year. I’m of the belief that the November month will set the tone not just for the 2023 calendar year or even 2023-24 financial year but the next financial year as well.

If these are early signs of an economic downturn, then the situation would only worsen in 2024. Right now, the manufacturers have the cushion of inflated prices to fall back on. Thus, even with the discounts, they may not feel the heat much. Moreover, the fatter profits from the last few years will further make for a soft landing for the auto industry. But for the average consumer, the 2024 festive season may bring greater discounts. Although, they may come at the cost of deteriorating buying power.

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