Maruti continues to cut dealer dispatches ahead of big festive month. Here's why
- Maruti Suzuki, India's largest carmaker, is sitting on nearly a month's worth of inventory ahead of two major festivals.
Maruti Suzuki continues to restrict number of cars it dispatches to dealership every month ahead of the big festive weeks of October when car sales is usually at its peak. The unusual strategy comes amid Maruti's stockpile of unsold cars hitting nearly a month's worth of inventory. Maruti sells more than one lakh vehicles every month which gives a hint at the size of unsold stockpile. Maruti Suzuki says the recent slump in sales have forced it to continue restricted dispatches to dealerships to clear pending orders and inventory. However, the carmaker feels that some of the unsold stock will be cleared in October when the sales are expected to go up.
During a press conference on Tuesday, Maruti Suzuki reported marginal drop in sales amid a general slowdown across the industry. Besides Maruti, major carmakers like Tata Motors and Hyundai Motor have also reported drop in sales in September. Reduced sales has led to build up of unsold cars for carmakers. Maruti had initiated restrictions in number of cars dispatched to dealers about three months ago. The carmaker calls termed the strategy as a ‘recalibration of its inventory’ to allow dealers to clear stocks.
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Why Maruti is yet to clear unsold car stock
In the last few months, Maruti has been able to reduce the stockpile by about a week's worth of inventory. Yet, more than one lakh vehicles remain in dealer stockyard. Partho Banerjee, Senior Executive Officer (Sales and Marketing) at Maruti Suzuki, told reporters that overall sales in the auto industry has been dampened after witnessing growth last year due to pent-up demands. He also said that sales in September witnessed drop due to the inauspicious Shradhh period taking up the last couple of weeks of the month when people do not prefer buying.
While October is expected to see a jump due to festivals like Navaratri and Diwali, Banerjee said sales are likely to drop again November. However, he maintained that Maruti has not seen any drop in bookings during this time.
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Maruti car sales in September
Maruti Suzuki sold 1.44 lakh units of passenger cars in the country last month, a slight increase from 1.43 units sold in the previous month. However, compared to the same month last year, the sales numbers are down. Both the small and compact car segments witnessed drop in sales.
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Maruti Suzuki has not shared any details on the exact number of cars or their worth. It has also not revealed how long the strategy is likely to continue before normalcy returns. About a month ago, India's vehicle dealers body Federation of Automobile Dealers Association (FADA) had said that there were around 7.30 lakh unsold vehicles worth about ₹73,000 crore, roughly what the entire four-wheel passenger vehicle industry usually sells within two months.
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