Output cut signs flash on auto avenue
Analysts, however, say stock levels are not alarming yet. They attribute the inventory spike to sub-par festive sales in November, when volumes rose a mere 1.79% to 1.5 million units. Besides, December is dull on sales as buyers wait until New Year.
In the M&HCV segment where R2-3 lakh discounts are on offer, inventory levels are now at about six weeks. According to dealers and analysts, this is less worrying than eight-week stocks during July-August. In fact, sales through the fiscal have been sluggish as slowing economic growth, rising fuel prices and high interest rates depressed sentiment.
A Tata Motors dealer said that though companies are compensating dealers, discounting has eroded margins, even as warehousing costs (insurance, rent and interest on loans) have doubled. “Discounts are more than dealer margins; so it's supported by the manufacturer. The schemes are being offered to clear stocks and compete with new players such as AMW and Bharat-Benz. The dealer margin has shrunk from R50,000 to R10,000, and that’s pinching us,” he said.
In a good month, Tata Motors sells about 18,000 units of M&HCVs and Ashok Leyland 7,000 units.
These volumes are now down to about 12,000 and 4,000 units respectively. “Our inventory is in order. The discounts are there because
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