Given that this month the PV industry has seen record sales and festive sales are just starting, what are you expecting for the months of October and November?
Yes, it looks like it. Actually, we have the festive season in India spread over different states at different points of time. It normally begins with the Onam festival in Kerala, starting from 17th August. So, the start of the festive season in India is 17th August and in the automobile industry, we take Bhai Dooj as the end of the festive season, which is two days after Diwali, that is on 14th November.
This period is about 87 days this year and that keeps varying of course. Last year, it was 71 days, roughly 23% to 26% of the annual sale happens in this period and since the industry is looking at a 40-41-lakh sale this year, it is expected that this year one million plus vehicles will be sold. And, of course, in the Onam, which was specific to Kerala where about 13-14% of the Kerala sales happened in the Onam period and we saw an uptick of almost 24% there.
But if we see the inventory which is now at a three- to five-year high as well, how do you see this because post festive season maybe going into 2024, could we be in for a little sober sale year as compared to what 2023 was?
Inventory level at the moment for the industry is around 331,000, which is around 30 days of stock, not very high, that seems to be the normal inventory pre-Covid. But, of course, in the last three years, we have not seen this type of inventory build up. In fact, 331,000 was touched five years back in September of 2018.
Obviously the inventory level is somewhat a high level but this is the Shraddh period now from , 29th September till 13th of October. Normally in this period, retails come down and stocks build up and inventory is added by the dealers because they expect sales to happen post the Shraddh period which will start from 14th of October.
It really depends on how the retails shape up after 14th October because expectedly then the inventory will come down. And going forward for 2024, if the economy continues to grow the way it has been growing, then we can see the positive momentum continuing. However, there are some red flags like inflation and the higher interest rates which could be a dampener going forward.
Let us move right on then and what is the outlook in terms of your discounts because this is the time that the most attractive discounts are being offered in the small car segment in particular. So, where is the company planning discounts this festive season?
So, as far as discounts are concerned, there have been some discounts in the smaller cars not only in the festive season but before that as well because the production and supply was much more than the demand for the vehicle and the reason why the production was not modulated as per the inventory and the demand was because the semiconductor crisis prevented OEMs from making those other larger vehicles, for which we had a long waiting period. Now that the semiconductor crisis is somewhat in the background since July of this year, we have modulated the production of the small cars and I do not see the discount levels going up for those models also from the levels that we see now.
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