FADA urges OEMs to cut inventory even as festive auto sales surge 11.76%

To ensure dealers start 2025 with an ideal stock of 21 days, the Federation of Automobile Dealers Associations (FADA) on Friday called upon Original Equipment Manufacturers (OEMs) to further reduce inventory levels despite "robust" festive sales.

The request comes on the back of strong festive season performance, with vehicle retail sales seeing a 11.76% year-on-year increase to reach 42.88 lakh units, according to figures released by the automotive dealers association.

Commenting on the 42-day festive period, from the first day of Navratri to 15 days post-Dhanteras, FADA president MC S Vigneshwar said, "I am delighted to announce that the automobile retail sector has achieved a new milestone, surpassing last year's festive records. We witnessed a remarkable surge in numbers since the beginning of Navratri, nearly hitting our forecasted target with 42.88 lakh vehicles registered during this period—a growth of 11.76% over last year's 38.37 lakh units."

He credited two-wheeler sales for much of the growth, which saw a 13.79% rise to 33.11 lakh units, largely thanks to rural demand. Passenger vehicle sales also rebounded by 7.10%, reaching 6.03 lakh units, spurred by both "pent-up demand and unprecedented discounts" offered in the market.

Vigneshwar, however, noted that adverse weather held back what could have been an even bigger season.

"While we celebrate these achievements, we acknowledge that we could have fully met or even exceeded our targets of 45L units if not for the unseasonal heavy rains in South India, especially in Bengaluru and Tamil Nadu, and the Cyclone Dana that affected Odisha," the FADA chief said.

FADA expects that stock levels will further reduce from October’s numbers.

"However, FADA advises caution as the complete picture on inventory will emerge by month-end," Vigneshwar said.

"With 1.5 months remaining before the calendar year ends, FADA urges OEMs to focus on liquidating 2024 stock so that Dealers can enter 2025 with ideal FADA-recommended 21 days of inventory," he added.