Two-wheeler wholesales rise but retail sales still a concern, say dealers

Many dealers FE spoke to said that they have an inventory of nearly five weeks. Normal inventory available should be of around 15 days and ideally not cross 30 days, they added.

Two-wheeler wholesales rise but retail sales still a concern, say dealers
The entry-level segment, which constitutes 70-75% of the total two-wheeler sales, is facing headwinds due to relatively higher ownership costs. Image: FE

Even as the wholesale despatches of two-wheelers made significant recovery in July, their retail sales are still a cause of concern, multiple dealers told FE.

The data shared on Friday by the Society of Indian Automobile Manufacturers (Siam), the body representing vehicle manufacturers, showed that two-wheeler volumes rose 9.61% y-o-y to 1,381,303 units in July. However, the retail sales of two-wheelers declined 10.92% y-o-y to 1,009,574 units during the month, according to the automobile dealers’ body, Federation of Automobile Dealers Associations (Fada).

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Though the original equipment manufacturers (OEMs) are despatching more vehicles in the expectation that sales would improve during the festive season, the dealers said the retail sales are not particularly “healthy”.

The entry-level segment, which constitutes 70-75% of the total two-wheeler sales, is facing headwinds due to relatively higher ownership costs. The OEMs have hiked vehicle prices on at least two occasions this year alone owing to rising input costs. The high gasoline prices have also dampened demand.

While the inventory build-up at dealerships usually started from August end in the past, it began as early as June this year. FE reported in June that a large section of two-wheeler dealers had asked OEMs to put a complete stop to monthly despatches by cutting down production, as inventory levels soared to around 60 days due to the continuing weak retail sales.

Many dealers FE spoke to said that they have an inventory of nearly five weeks. Normal inventory available should be of around 15 days and ideally not cross 30 days, they added.

Also Read| Two-wheeler wholesales improve in July, but retail demand still not buoyant

The sector experts further said the festive season sales are usually 30% higher than any normal month. But the dealers still do not expect to touch the pre-Covid levels. Many among them are also expecting the OEMs to furnish more offers this festive season to boost sales as the dealer margins are limited.

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