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Old 7th December 2013, 11:32   #1
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Default Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

Source:

http://timesofindia.indiatimes.com/b...w/26985988.cms

Quote:
The auto industry's post-Diwali sluggishness has led to an inventory pile-up at dealerships and factories worth Rs 20,000 crore. Stocks have piled up to double the usual average of three to four weeks and a number of passenger vehicle makers, including Maruti Suzuki and General Motors India, have either gone for a production cut or for plant shutdowns so that they don't need to carry 2013 stock into the new year.

For example, a well-known European brand has 28,000 cars in its factory and dealerships. Dealer sources said the festival season wasn't good enough to clear out all inventory and November has been a sluggish month.
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Old 7th December 2013, 12:18   #2
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Default re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

Welcome to the world of Boom and Bust cycles.

Carmakers are trying hard as shown by this report which wants to portray Nano as the most trusted brand in India.
Link http://www.business-standard.com/art...0600510_1.html

Do I see a Cash for Clunker program in India or amazing stock clearing discounts in 2014.
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Old 7th December 2013, 14:38   #3
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

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For example, a well-known European brand has 28,000 cars in its factory and dealerships.
99% probability, this is VW. The grapevine insists they've been producing a lot more than actual demand. Loads of dealers still have cars manufactured in the first half of 2013.
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Old 7th December 2013, 14:44   #4
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

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Originally Posted by GTO View Post
99% probability, this is VW. The grapevine insists they've been producing a lot more than actual demand. Loads of dealers still have cars manufactured in the first half of 2013.
First half of 2013? A friend of mine was in market to buy a VW Vento and the dealer tried to sell him a Oct 2012 make Vento HL. This happened a week before Diwali. When he asked for the VIN number after hearing the lucrative deals the Sales Person started making excuses and after a lot of pressure we were given a VIN number and we got to know its a Oct 2012 car. He even went to see the car, but later decided to back out as the car was delivered to dealer in Nov 2012 and had been parked at his yard ever since.

I am certain there are dealers holding stocks which was manufactured before the first half of 2013.

Regards,
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Old 7th December 2013, 14:46   #5
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

Come whatever Japanese techniques of lean manufacturing systems, the heck it comes down to dust when its Indian market sentiment . The laws of those books must so be re-written by someone from India you see.

Last edited by vvijay : 7th December 2013 at 14:47.
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Old 7th December 2013, 16:16   #6
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

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Originally Posted by GTO View Post
99% probability, this is VW. The grapevine insists they've been producing a lot more than actual demand. Loads of dealers still have cars manufactured in the first half of 2013.
Interesting, I too saw the report and seeing the full front page ad from Renault in the Delhi edition of the TOI, thought it was them. Another reason is that VW has some of the most lackluster dealers on the business. I have recently asked about the Vento TSI - no interest and no cars. I also asked about the Jetta TSI - again no car and was told that availability is only expected in February.
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Old 7th December 2013, 17:38   #7
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

I do see a lot and I mean a LOT of cars at the VW plant. What India needs is lowering of prices amd taxes on the cars so that people are ready to upgrade and move forward. Only then we can have vehicle Life laws in place and sales of cars will be assured. But for that govt must support by lowering taxes and/or giving bonus for replacing old car with new.
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Old 7th December 2013, 18:09   #8
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

A dealer whom I had enquired for the Swift ZDi had called me yesterday saying, "Please take the delivery soon as Maruti is planning to hike the prices by 10,000 on all models from Jan, 2014.

I told I accept the hike and will wait for the New one.

Now I feel this price hike issue is just to lure customers and to get rid of the stocks as VIN-13 will not sell much once the VIN-14 is in picture.

The inventory status speaks for itself.

Anurag.
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Old 7th December 2013, 18:59   #9
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

What a beautiful report! I think we are looking at one of the BIGGEST discount seasons of all times!

More than discounts, I hope this instill some sense into the minds of the automakers in revising the prices and remain sane. I seriously wish the trend hold on to some more time so that every manufacturer think thrice before raising a single rupee in the name of inflation and rupee weakening!!

Edit:: I know it's wishful thinking - But will any manufacturer do a negative revision and force others to go the same route?

Last edited by swiftnfurious : 7th December 2013 at 19:13.
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Old 7th December 2013, 19:40   #10
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

Market sluggishness or Car Makers caught napping?

Agreed, these are difficult times but if companies brush this under the name of market conditions ONLY, they are never going to learn. New launches like Ecosport, Amaze etc. are doing exceedingly well.

It's the time to retrospect and take the Indian Customer seriously. Companies should change some of their mindsets like the below,

1. VW - We are premium than Skoda. The Indian Customer is blessed to buy VW. We will not provide decent Service.
2. Chevy - What shall we launch next year? How about re-branding an already old Chinese car?
3. Renault-Nissan - Duster-Terrano rocks! Our exports rocks. Rest of the line-up? Is there one? Let's launch another brand all together and screw ourselves.
4. Ford - Let's sell one Model at a time.
5. FIAT - One day we'll sell cars and not just engines!
6. TATA - All is well. Our re-designed/re-named Vista is going to sell. Let's wait till then.
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Old 7th December 2013, 19:42   #11
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Quote:
Originally Posted by GTO View Post

99% probability, this is VW. The grapevine insists they've been producing a lot more than actual demand. Loads of dealers still have cars manufactured in the first half of 2013.
This kind of explains one strange thing I had been observing. In the course of purchase of my vento tsi I had visited VW showrooms multiple times. 90% of the time the cars on display were the pre refresh model. ( without leatherette seats , black bordered headlights etc). Since it was a minor refresh , I think only a informed buyer with would know it is an older model. Pretty sure they are pushing these cars as part of their various offers.

On the other extreme for the tsi they are not supplying enough cars in the preferred colors.

Another point. I really don't understand the thought process of the manufacturers. I was a buyer in the market for an AT. I go to ford, no chance of booking ecosport, no fiesta AT available. Reason: upcoming refresh. I go to Honda. No city AT. Same reason as above. Ask for Amaze AT. Asked to wait 4 months. Reason. Low demand so low production of AT. Rather ironical. I go to maruti for an A star. Promised a test drive at my door step. No news in spite of couple of follow ups. I go to VW and am told: no more supplies for the rest of the year. Finally had to do a lot of circus to ensure that I got the last available car.

And they complain people are not buying . . . !

Last edited by Rajeevraj : 7th December 2013 at 19:54.
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Old 7th December 2013, 19:54   #12
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If it's VW that's got 28,000(!) units lying in their stockyard, then I guess they're going to need to sell them with either MASSIVE discounts (unlikely) OR with a 5 year 'Absolutely No questions Asked' warranty offer (and maybe even AMC & 0% finance options).

IF or When VW does that, others may have to follow. This would cause used car prices to fall too.

Industry-wide stock pile-up worth Rs.20,000/- Crore even for cars worth (avg) 8lakh each translates to 2.5 lakh cars(!) For the industry to sell those cars in this sluggish market, no matter what offer they roll out, car prices could really take quite a hit.


Edit : Actually its worse because the report calculates Avg car price at 6 Lakh. But still, lets take it @8L/car.

Last edited by GrammarNazi : 7th December 2013 at 20:16.
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Old 7th December 2013, 20:16   #13
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

Its usual business for dealers to push stock out of their yards to customers in a do or die attitude. We have experienced it both times we brought cars, as we used to book in december and take home a january manufactured car. So I think this situation will worsen this year.

Also expect December shipments to fall, thereby showing a downslope in our sales charts here in TBHP. However what I dont understand is, when we speak about accumulation of stock, what is really accumulating? Is it because production is higher than demand? Take Ford for example. Their production is now focussed on ecosport and the car is having a huge demand and waiting period. So no stock accumulation. Figos and fiestas wouldnt produced in great numbers. Same with honda, as they are focussed towards the amaze, which is again selling decently. Maruti could have extra stock that is agreeable, looking at the elimnation of waiting periods.

So I think this has got more to do with the Germans and maybe Toyota and Mahindra.
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Old 7th December 2013, 20:49   #14
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

I think we are almost at the end of the bear cycle and automobile companies can look forward to a better FY 2015. Companies that have done their homework to be ready for the cycle upturn with better market focused products will be better placed.
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Old 7th December 2013, 20:55   #15
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Default Re: Auto inventory pile-up at Rs 20,000 crore, post Diwali 2013

The Japs, the Germans and Indians, all would have inventory pileup's. The Koreans & Americans are increasing shifts to fulfill demand.

This could stay for months unless prices are reduced and people decide to compromise with cheaper alternatives rather than wait for their current expensive choice.
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