For auto companies in particular, the season contributes 30-35% of total sales in a year. So it is little wonder all major car and two-wheeler makers have started despatches to dealers so that they have enough stock on hand. Since sales during last years festival season was weak (down 4.5% versus a year earlier), and given sales have jumped in the past two months, manufacturers and dealers are taking no chances and building up a huge inventory stockpile Maruti Suzuki has already built up an inventory of six weeks, double the normal.
As a strategy we have started building up inventories ahead of the festival season. The overall industry is not doing well, yet we are anticipating a spike of 10-15% in August-October, which is higher than industry expectations, said Mayank Pareek, COO, sales and marketing, Maruti Suzuki India.
Another reason for building inventory is because of some marquee launches this time during the period. Maruti Suzuki, for instance would be launching a new sedan Ciaz. Tata Motors has just launched a new sedan Zest to be followed by a new hatchback Bolt. Honda recently launched Mobilio and Hyundai a refurbished i20.