Auto dealers eye festival demand with caution

Retailers also stocking up due to supply chain uncertainties

Notwithstanding the fact that retail automobile sales do not yet reflect the buoyancy seen in wholesales, automobile dealers are building up inventory in anticipation of some demand recovery in the festive period amid an uncertain supply chain, said Vinkesh Gulati, President, Federation of Automobile Dealers Associations (FADA).

“Dealers are building inventory for the festive season… this is a normal process every year,” Mr. Gulati said on Saturday. “Although we are seeing positive figures for wholesale sales… it is not that good a picture on the registration or the retail customer side,” he added.

Noting that the industry had seen a really bad period in April and May, followed by some pent-up demand in June and July, he said there was now an expectation of some “postponed demand” emerging in September, October and November.

Observing that inventory at this point was not an issue, he said dealers were also still wary of supply chain uncertainties and hence stocking up.

“We have been in tough times since October-November 2018. We were expecting that after that one-and-a-half years of de-growth, this festive season would be a time when we will start seeing the uptake or the growth in the market,” Mr. Gulati said. “But now with COVID-19, I don’t feel that sort of growth will happen, and may be extended by six months or a year depending on how things go further,” he added.

For dealers, viability was currently the biggest concern. “We are not talking of profitability; if it comes at least you are earning something… as an association, we are working on 2-3 parameters including talking to manufacturers to increase the margins,” he said.

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