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Industry body FADA says inventory levels in passenger vehicle segment are a worry

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Ashish Kale, president of Federation of Automobile Dealers Associations (FADA), spoke to CNBC-TV18 about the growth in auto sales and sector outlook.

Ashish Kale, president of Federation of Automobile Dealers Associations (FADA), spoke to CNBC-TV18 about the growth in auto sales and sector outlook.
“In terms of inventory, I don’t think inventory levels are very high. However, growth has tapered down a bit in November. Although overall growth from April to November has still been strong. We can see a deepened demand post Diwali and that can be more seen in the heavy segment. The medium range and the light commercial vehicle (LCV) segment is still quite robust in terms of its growth,” Kale said on Wednesday.
“On an average, the inventory is about 20-23 days and healthier inventory is about 15 days but taking into consideration the logistics and everything, I think this inventory level is not something which we have to worry about,” he added.
Talking about the inventory level in the passenger car segment, Kale said, “Inventory level in passenger cars definitely is a worry for us. Just before the festive season, all of us stock upon inventory because there is a huge spurt in sales during that time, however as we have already reported in our retail numbers that this time the festival season was not as expected because of which then the dealers are left with heavy inventory, we are hoping that December all the companies coming out with fantastic schemes, we are able to get this inventory level to healthier levels. I wouldn’t say that is the ideal level but we hope that it will come down to around 35-40 days. Average inventory level or good inventory level for the dealer is about 30 days."
With regards to the goods and services tax on new and old cars, Kale said, “I don’t think the goods and services tax (GST) rates with new cars would be a priority for the government right now. If you look at the honourable Prime Minister’s statement, he is looking at more affordable things which are for a common man. Cars is still looked as a luxury. So I personally don’t feel that rates would go down but we have definitely appealed to the GST council to lower GST rates on used cars because that has now become the entry level segment and there is scope for the government to lower the used car rates. That is what we are hoping for in the next GST council."
 
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