Covid second wave and subsequent lockdown impacts sales
Suppressed demand due to the Covid second wave and subsequent lockdown has pushed up the inventory levels of two-wheelers at dealerships across the country. Compared to an inventory of 15-20 days prior to the lockdown in the first quarter of 2020, the inventory has climbed up to 41-46 days at the end of the fourth quarter of 2021. This has put a majority of dealers in the two wheeler segment in the danger of defaulting on credit.
Vinkesh Gulati, President, FADA told BusinessLine “We already started the lockdown with a high inventory level of 40-plus days. After which, there have been no sales. A typical tranche cycle of a bank is 30-45 days, after which the dealers have to repay the loans. The dates for the repayment of loans are approaching. However, dealers are yet to sell off their inventory, so they don’t have the money to repay.”