India’s May passenger vehicle wholesales jump shows inventory build-up

BENGALURU, June 13 (Reuters) – Indian passenger vehicle (PV) wholesales rose 13.5% in May, data from the Society of Indian Automobile Manufacturers (SIAM) showed on Tuesday, indicating a build-up of stocks amid worries of muted retail demand.

Carmakers sold 334,247 PVs in the month, compared to 294,392 units a year before, according to SIAM, which tracks sales made to dealers.

It was in contrast to retail sales, which grew only 4.3% in May and fell over 1% in April, as dealers contended with higher inventory and vehicle prices due to regulatory changes, according to the Federation of Automobile Dealers Associations.

There was some inventory build-up, which has been happening especially over the last two months, said Rishi Vora, associate vice president at Kotak Securities.

These companies were first servicing the retail demand, Vora said, but noted that over the last two months, with demand trends a little moderated, carmakers are filling up the wholesale.

Auto sales numbers are keenly watched as they are a key indicator used to assess private consumption, and carry more than 50% weightage in calculating the country’s economic growth.

Meanwhile, sales of utility vehicles, which formed around 54% of the PVs sold in May, excluding Tata Motors, rose 33.5% while passenger car volumes – also excluding Tata – fell 3% from a year before.

Two wheeler sales grew 17.4%, the data showed, boosted by the May marriage season in north and east India alongside pre-buying of electric scooters ahead of a government subsidy change.

Reporting by Nandan Mandayam and additional reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Varun H K