“Our inventory was at a very manageable level (in Q1), slightly higher than optimal,” Maruti Suzuki’s Rahul Bharti said.
31 Jul 2024 | 2445 Views | By Kiran Murali
Amid growing concerns raised by the Federation of Automotive Dealers Association (FADA) over a pile-up of unsold cars at dealerships and their call to rationalize production, India’s largest carmaker Maruti Suzuki India Ltd on Wednesday asserted that its inventory levels are manageable, though it is slightly higher than optimal.
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Amid growing concerns raised by the Federation of Automotive Dealers Association (FADA) over a pile-up of unsold cars at dealerships and their call to rationalize production, India’s largest carmaker Maruti Suzuki India Ltd on Wednesday asserted that its inventory levels are manageable, though it is slightly higher than optimal.
“Our inventory was at a very manageable level (in Q1), slightly higher than optimal,” Maruti Suzuki’s Executive Director for Corporate Affairs Rahul Bharti told investors in a post-earnings call. He noted that 30 days of inventory is considered normal and the company had an inventory of 37 days at the end of June.
“Normally when inventory goes below 30 days, some colors or some variants might not be available for the customer. So we should maintain 30 days of inventory in any case. At quarter end, we were at 37 days, which is fairly fine and manageable,” Bharti added.
Recently, FADA raised concerns about growing car inventory across dealerships and said it would take up the issue with the Society of Indian Automobile Manufacturers (SIAM). Earlier this month, the dealers’ association said the passenger vehicle industry’s inventory was around 62 to 67 days.
Discounts on cars have also been increasing recently following the lower footfall at dealerships during peak summer in April and May and the higher pile-up of unsold cars. Maruti Suzuki provided an average discount of Rs 21,700 per vehicle during the April-June period, up from Rs 14,500 in January-March.
Meanwhile, Indian carmakers and industry associations have guided 3-5% growth in passenger vehicle volume growth in 2024-25. The growth is seen moderating from a high base of 42 lakh cars in 2023-24, which was an increase of 8% from 2022-23. India’s passenger vehicle wholesales rose 3% on the year during April-June to 10.3 lakh units.
Apart from the high base, one of the major factors limiting the growth is the weakness in small cars. The small cars segment has been among the most impacted by the pandemic amid the disproportionate increase in the cost of vehicles in that segment and general distress in the middle class.
Maruti Suzuki’s Chairman RC Bhargava had earlier said the revival of the small car segment is essential for the long-term health of the industry, and the company believes that demand for small cars is likely to pick up only in 2026.
Read More: Maruti Suzuki Q1’FY25 earnings: Net profit jumps 47% YoY as margin expands