Indian auto dealers warned on Friday that high vehicle stocks and rising financing costs could hurt demand after the festive season. Passenger vehicle inventory stayed at 43-45 days, far above the recommended 21-day level. Dealers also noted rural stress and price hikes, even as retail sales might pick up soon.
Nov 6 (Reuters) - Indian auto dealers warned on Friday that elevated vehicle inventories and rising financing costs could weigh on demand after the festive season, even as retail sales are expected to pick up in the coming weeks.
Passenger vehicle inventory remained at about 43-45 days, well above the body's recommended 21-day level, the Federation of Automobile Dealers Associations said (FADA).
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FADA said October retail sales were hit by a shift in India's key festive season, with passenger vehicle registrations falling 14% from a year earlier and two-wheeler sales declining 28%, although it described the weakness as largely timing-related.
India's festive calendar is delayed this year, with major festivals falling in November rather than October. The festive season is a period when consumers typically step up big-ticket purchases including vehicles.
Dealers reported healthy festive footfalls but flagged pockets of rural stress due to deficient rainfall and a weak summer crop. Vehicle price increases have also eroded the benefit of last year's goods and services tax reduction, FADA said.
Reporting by Kashish Tandon in Bengaluru; Editing by Jochelle Mendonca and Sonia Cheema