According to the Federation Of Automobile Dealers Associations (FADA), the Indian automobile industry is facing a significant oversupply of unsold passenger cars, with 700,000 units worth US$8.7 billion. This surge in inventory has led Maruti Suzuki India Limited (MSIL), the market leader, to announce a production cut.

FADA noted that the average inventory-holding period for dealers increased from 65-67 days to 70-75 days in July. Despite a 7.4% rise in production in the first quarter of fiscal year 2024-25, reaching 496,000 units, sales grew only slightly by 1.2% to 427,000 units.

This year’s demand has been weaker than anticipated due to national elections and adverse weather. An MSIL official stated that production adjustments are underway to manage inventory and that demand will be closely monitored, especially with the festival season starting earlier this year.