Opinion

All you need to know about Car stock piling

Yup these are brand new parked cars ! Read ahead ūüôā

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The cars shown above are not parked cars near a cricket stadium or a football stadium. They are just brand new cars, each waiting for a owner for years. I mean waiting for a sale. There are so much brand new cars that are stored in the companies yards, that soon they will be running out of space in coming days !  Waiting in the sun and rain for years and years there is even a good possibility for the paints to faint and rubber tires to rot !

The car companies pay top dollar ( ie. in billions ) to maintain the nest of these cars spanning across acres of land ( but would never sell these cars at low prices ! ). Even at the rate of so much piling up of cars in the yards, the companies still expect to sell the cars at a higher rate Рbut who is there to buy?

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Current Scenario:

The assembly line manufactures cars every minute Рbut this needs to change as every home already has a car and the process of buying is changed the more people are satisfied with what they have already. The car companies on the other hand, will not stop their production as that may lead to heavy loss and closure of their factories Рwhich may result in tens & thousands of people loosing their jobs. The current stats say that near 5000 cars are made every week but hardly 1500 are being sold Рand the remaining are sent to the stock area. Experts say that cars are already used by every individual in developing countries and there is not much demand. So they expect a reduction of production units to happen & this will continue until the population of people equals that of cars.

Car production giants like Nissan, Honda and Hyundai etc. are going for creating new technologies in cars and are also expanding costly segments in highly populated countries like India where there is a need of a good car still. But in countries like India the market for costly segment is low when compared to others¬†–¬†so, companies are producing large units of cars depending on order and forecast but finally the demand fall’s when a new car hits the¬†market. For example, the Nano cars (¬†a¬†TATA MOTORS product ) is cheap and especially made for the Indian market… but eventually what happened? only 1600 units are being sold out every week and the remaining 5400 takes 4 months are more to sell & are stock piled in their yards. The astonishing thing is¬†TATA motors has already entered a new project called Nano twist production. What will happen to the remaining un-sold cars in the yard ? – no body knows !

When coming to NISSAN, the giant itself was not able to escape from this stock piling issue. In the SUNDERLAND CITY the production of NISSAN MICRA AND NISSAN NOTE has been stopped due to high stock without equivalent sales and they have cleverly moved their channels to export and establishment in china and India. Even FORD and MAHINDRA are facing similar stock piling problem in their sedan sections (But the XUV and Ecosport have somehow made their ways up the ladder ). With regards to Fiat, the sale has been dropping from 2012 t0 2014 Рas they have their share of stock piling as well.

Factors Contributing to Stock Piling:

In general the most expensive cars and high demand cars need ordering and correlated ERP and SAP tools that will look after the manufacturing of no. of units very closely. In real time the units that are ordered will take 4 to 6 months of deliver time & in this period another 10 companies releases similar versions of 10 more models of cars Рto reason the competitive advantage. Now these new releases will become more sophisticated cars in the segment thus making the original model an old model ( which eventually no one will buy )

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Image note : Crushing of cars (at one shot 100 cars are crushed into a cube.)

In mean time, the Aftermarket segment is gaining a lot of market, by supplying each and every part of a car( For eg: if a car meets with an accident, the next day the customer will visit the aftermarket shop and buy products than choosing OEM for repair ). Also Remodeling, extra-fittings, default option etc.  are available in today’s market. A healthy car market is created only when people buy cars Рuse it for a period of time & than buy a new one. But due to these after markets, people keep using the same car for generations !

 

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completed graduation in mechanical engineering lives in tirupathi.worked in SIBAR AUTO PARTS LIMITED and AXLE INDIA LIMITED from past one year.ISME member since 2010