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Informist, Monday, Sept. 7, 2026

By Anand JC

MUMBAI – The buildup of passenger vehicle inventory with dealerships in India in recent months is not alarming but a gradual and healthy build-up ahead of the festival season, Sai Giridhar, President of the Federation Of Automobile Dealers Associations, told Informist Monday. Inventory of passenger vehicles has risen by five days over July-end to 38-40 days now.

"Passenger vehicle inventory level is going up, but it is not forced, it is healthy. Generally, at the cusp of festivity, we tend to build our inventories," Giridhar said. Depending on their appetite, dealers prefer to have a larger inventory ahead of the festival season to ensure quicker closure of deals post enquiries. 

The automobile dealers' lobby body generally recommends the inventory level to around 21 days. "Even if it goes up to 45 days (in September), I don't see it as an alarming situation. But probably post the festivity, this needs to get corrected and again come back to the earlier days, where we were somewhere less than 30 days," Giridhar said.

Inventory had swelled to a staggering 70-75 days in the same period last year as customers held off their decision to buy automobiles ahead of Sept. 22, when a new regime of goods and services tax had came into effect. Dealerships currently have 56% higher stocks of passenger vehicles month-on-month.

FESTIVAL SEASON

Automobile dealerships sold 2.42 million automobiles in August, up 18% on year and down a little over 6% on month. Automobile sales pick up rapidly in the latter half of any calendar year as sentiment gets a boost due to a host of festivals. However, sales moderate during Pitru Paksha or the inauspicious Shraaddh period. This year, the fortnight will begin on Sept. 27.

"There is a good healthy build up as far as the auto bank is concerned. This time around, the festivity is properly spread across months," Giridhar said, adding that it is an evenly paced festival season till December which should ensure automobile retail sales hold their momentum.

E20 WORRY, EV PUSH

In August, retail sales of passenger vehicles fit with hybrid, electric, and compressed natural gas powertrains combined touched almost 42% of the overall cars sold, higher than petrol, which stood around 41%. Automobile companies have said sales of their electric vehicles went up after the war in West Asia, which had prompted multiple fuel price hikes by the state-run oil companies in May. 

Automobile dealers attribute the shift to running-cost economics and continuing consumer hesitation around the transition E20-blended fuel. "Somewhere down the line, we feel that the push towards EVs is because of E20 also, although it (the worry) is tapering down gradually," Giridhar said. E20 fuel is now the petrol standard sold in India, and tends to provide lower mileage than pure petrol.

"Earlier there were lot of existing customers or lot of prospects who were worried Now with the OEM sharing the SOPs (standard operating procedures) we know exactly how to handle the customer, how to answer to its queries," Giridhar said, adding that the frontline staff and sales service staff are better prepared to allay concerns. 

PRICE HIKE CONCERN

Automobile companies have increased prices of their products multiple times this year, albeit calibrated, to pass on the prices of surging commodity prices. Monday, Maruti Suzuki India Ltd., India's biggest passenger vehicle maker, hiked prices for the third time this financial year. FADA said that while the market has absorbed the price hikes, the headroom is finite and thinning.

"We firmly believe that if the entire benefit of GST 2.0 reforms is wiped off with these price increase, it is definitely going to start affecting the consumer sentiment," Giridhar said. "OEMs (original equipment manufacturers) should take a cautious call, because it is not that every month we see this kind of growth which is happening in our industry," he said.  End

Edited by Akul Nishant Akhoury

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