Two-wheeler makers were grappling with muted demand in the domestic market. This has, in turn, resulted in an inventory build-up which was worrying the dealers. In August, there was a decline in domestic sales across-the-board decline for two-wheeler manufacturers. It has led to a build-up in inventory ahead of the festive season as of today.
Sources told CNBC-TV18 that two-wheeler inventory on an average would be 40 to 45 days, which is quite high compared to the normal inventory of 25 to 30 days.
While high inventory just ahead of the festive season is a normal trend but in these times when there is a lack of demand in the domestic market, dealers are worried about their investment.
According to industry estimates, the inventory, dealer stock for Hero MotoCorp would be somewhere around 7 to 8 weeks. It would be the highest inventory among two-wheeler manufacturers.
While their sales in August declined 22 percent on a year-on-year basis, the domestic sales declined 24 percent. This was the sharpest decline among two-wheeler manufacturers.
For Bajaj Auto, the inventory is about 5 to 6 weeks; similarly of TVS would also be in this range. Domestic sales for both these companies had declined, but as far as exports are concerned, they remained strong.
Honda Motorcycle and Scooter India (HMSI), another large two-wheeler manufacturer in the country, has 4 to 5 weeks of inventory. Overall sales for HMSI had declined 2.9 percent, domestic sales had declined 6.2 percent.
So high inventory amid muted demand is a big worry for automobile manufacturers as they enter the festive season.