Car dealers in India are facing a tough time due to a slowdown in demand and a buildup of inventory. According to industry executives and brokerages, the inventory levels have risen to around 50-55 days, which is similar to what was seen during the Diwali festival. As a result, car dealers are offering discounts to clear out inventory, which is typically only seen during peak sales periods like Diwali.
The country’s largest carmaker, Maruti Suzuki, has reported a 10% decline in sales in February compared to the same month last year. The company’s leadership has expressed concerns about the sales environment, saying that the passenger vehicle market is not as great as it once was.
Other carmakers, such as Hyundai and Tata, have also reported declines in sales. Hyundai’s sales were down 16% from the previous fiscal year, while Tata’s sales declined 3%. Mahindra & Mahindra’s sales declined 12.03% from the previous fiscal year.
As a result of the slowdown in demand and the buildup of inventory, car dealers are offering bigger discounts than usual. According to analysts, discounts are now as high as 75-80% higher than last year. This is putting pressure on carmakers’ margins and leading to price hikes.
Maruti Suzuki, Hyundai, Tata Motors, and Mahindra & Mahindra have all announced price hikes of 3-4% from this month. While prices will go up, there is some hope that the government’s tax incentives, which kick in from the financial year 2026, will bring about some relief for the sector. Additionally, the Society of Indian Automobile Manufacturers data for April to February showed that domestic sales have grown about 2%.
Despite the challenges, there is still some optimism that the market will stabilize in the second half of the financial year, following the end of the festival season and the introduction of tax incentives. As one analyst noted, “There are structural challenges, but the demand scenario is not all too negative.”