What happened
India counts car sales in two ways. Wholesale is the cars a maker sends to its dealers. Retail is the cars dealers actually sell, counted when they are registered. This month the two numbers tell different stories.
- Carmakers sent 5,28,384 passenger vehicles to dealers in October, up 12.4% on last year, according to Business Standard.
- Retail, reported by the Federation of Automobile Dealers Associations (FADA) on 6 November, was 5,07,768, down 14.23% on last year. FADA puts most of that fall down to Diwali moving into November this year.
- Dealers were holding 43–45 days of passenger vehicle stock, the same as in September. FADA's recommended level is 21 days. It hopes festive sales bring stock down to about 30 days by December.
- About 31% of dealers said higher financing costs and loan repayments were hurting them moderately or badly. FADA also said entry-level cars stayed weak while SUVs and new launches sold well.
FADA's president, Sai Giridhar, told Reuters that stock at these levels into December would mean dealers “start losing money”. He added that stock stuck near 45 days would push dealers and carmakers into extra discounts.
The 43–45 days is an industry average, and brands are far apart. Maruti Suzuki said its dealers had just 12 days of stock at the end of October. Mahindra said its SUV stock was under eight to nine days, not counting cars in transit. Both said demand was strong over Dhanteras.
Industry averages reported by FADA. Bars use the middle of each range.
The case
You are the area sales manager for a carmaker in a north Indian zone with 10 dealers. Most of your volume is an entry-level hatchback. Diwali is over, and your dealers hold about 45 days of stock. Head office wants 2,500 more cars sent to your dealers before 31 December to hit the year's wholesale target. What do you do?
1Clarify
- Which models and variants make up the stock? An average of 45 days can hide 10 days of a hot SUV and 80 days of a slow hatchback.
- Who pays to hold the stock? Dealers usually fund it with a loan. Knowing the rate, and whether we offer interest support, tells us who feels the pain.
- Am I judged on wholesale or retail? If my target only counts cars sent, the incentive is to push. That is worth raising with head office.
- What does the order book look like after Diwali? Bookings, test drives and cancellations tell us what December retail will be.
2Structure
- Demand: how many cars will actually reach customers by 31 December, model by model?
- Dealer health: what does the extra stock cost each dealer in interest and margin?
- Company goals: what the wholesale target protects, such as factory output and reported numbers.
- Levers: how much to send, which models, to which dealers, and what retail support to add.
3Analyse
Turn days of stock into cars
Assume the zone retails 1,000 cars a month, about 33 a day. Forty-five days of stock is then about 1,500 cars sitting with dealers.
Every sales manager should know this formula: closing stock = opening stock + cars sent − cars sold. Assume we expect 1,800 retail sales between now and 31 December, which is a normal pace plus a small festive lift.
- Send the 2,500 head office wants: 1,500 + 2,500 − 1,800 = 2,200 cars at year end. That is about 66 days of stock (2,200 ÷ 33).
- Aim for FADA's 30-day hope (1,000 cars): send 1,000 − 1,500 + 1,800 = 1,300 cars.
- Aim for the 21-day norm (about 700 cars): send 700 − 1,500 + 1,800 = 1,000 cars.
What the extra stock costs
Assume an average car is worth ₹7 lakh to the dealer and the stock loan costs 10% a year. Holding one car for a month costs 7,00,000 × 10% ÷ 12 ≈ ₹5,833.
If we push 2,500 cars, the zone ends the year with 1,200 more cars than the 30-day plan (2,200 − 1,000). That is 1,200 × ₹5,833 ≈ ₹70 lakh of interest every month across our 10 dealers, about ₹7 lakh each.
Now compare that with what a dealer earns. Assume a dealer keeps about ₹25,000 on each car. One extra month in the yard eats 5,833 ÷ 25,000 ≈ 23% of that margin. If the dealer then offers a ₹15,000 discount to clear the car, very little is left: 25,000 − 15,000 − 5,833 ≈ ₹4,200.
The other side: why head office wants volume
The target is not silly. Factories run best at a steady pace, and a missed wholesale number shows up in the company's monthly results. Sending too few cars also has a cost: if December retail beats our 1,800, dealers run out of the models people want. So the question is how to protect the year without loading dealers with cars that won't sell.
4Recommend
I'd send about 1,300 cars, not 2,500, so dealers end the year near 30 days of stock. I'd use our own retail effort to close as much of the gap as we can.
First, pushing 2,500 leaves about 66 days of stock and roughly ₹70 lakh a month in extra interest for our dealers. That cost comes back to us later as demands for discounts. Second, the mix matters more than the total: I'd send more of the models with short waiting lists and fewer slow hatchback variants, and move stock between dealers before sending new cars. Third, I'd put a time-bound customer offer on the slow variants to lift retail, because a sale to a customer clears stock and a dispatch only moves it.
The risk is that we miss the wholesale target and the factory slows. To limit that, I'd review bookings every week and raise dispatches straight away if retail runs ahead of 1,800.