Production cuts on cards as auto inventory swells
The two-wheeler segment, which usually is not adversely affected, is facing headwinds too.
Said a major North Indian dealer for two-wheeler market leader Hero MotoCorp, “Stocks are running very high, and though there have been no discounts till now, I think it can happen any time now. Whether it will help push sales, one doesn't know. Production cuts are the only way because we have no more space. Our inventory costs have doubled over last year.” Industry sources indicated that stocks are similarly high at both Honda and Bajaj Auto dealerships as well.
Earlier this month the Society of Indian Automobile Manufacturers (Siam) said that car sales will fall for the first time in 10 years this fiscal, after recording a 1.8% drop to 15.56 lakh units between April and December. Petrol car sales have been under pressure for most of the year, prompting industry majors such as Maruti Suzuki to cut production, but now the demand for diesel cars and utility vehicles have also started coming down as diesel prices have been increasing, said Vishnu Mathur, Siam director general.
Meanwhile, M&HCV volumes in the same period are also down 21.37% at 2.17 lakh units. Bike sales, which account for 73% of two-wheeler volumes, have also shown flat
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