As India's auto industry prepares for festive season sales, manufacturers emphasise advanced forecasting systems and digital transformation to help dealers manage inventory challenges while navigating GST policy changes and market volatility.
10 Sep 2025 | 3172 Views | By Darshan Nakhwa & Kiran Murali
India's passenger vehicle and two-wheeler industries are heading into the crucial festive season amid both optimism and caution. While the GST Council's recent decision to slash levies on small cars and two-wheelers from 28% to 18% is expected to provide a strong demand boost from September 22, the industry's dealers ...
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India's passenger vehicle and two-wheeler industries are heading into the crucial festive season amid both optimism and caution. While the GST Council's recent decision to slash levies on small cars and two-wheelers from 28% to 18% is expected to provide a strong demand boost from September 22, the industry's dealers warn of a potential ₹2,500-crore blow from cess already paid on unsold festive inventory. At the Federation of Automobile Dealers Associations' (FADA) 7th Auto Retail Conclave, automakers stressed that sharper inventory forecasting and digital tools would be critical to smoothing demand-supply imbalances.
Tarun Garg, director and Chief Operating Officer at Hyundai Motor India Ltd (HMIL), framed inventory as a "necessary evil" in the auto trade. "Without inventory, you cannot sell. Without sales, you cannot make any profit. But it is my sincere request, irrespective of the market situation, that dealers must get into forecasting. Because it is money at stake," he said.
Garg reflected on the volatility of recent years. From 2021 to 2023, the market was defined by shortages, with dealers demanding higher allocations and long waiting periods for popular models. In contrast, since mid-2024, geopolitical and other headwinds have left dealers holding unsold stock. "Everything was on waiting, and people would ask why you cannot forecast. Suddenly, from July 2024, things started to soften up. But next year when we meet, I am sure the question again will be, 'Sir, please give me more cars,'" he said, underlining how cyclical swings expose structural weaknesses in planning.
Hero MotorCorp's Chief Business Officer Ashutosh Varma underlined the need for more accurate forecasting. "Multiple people trying to forecast very accurately will have their own sense of variability. There will be challenges. So, I guess in this age and time, there is a need to bring in a lot more systems, which can forecast for people a bit more accurately. And of course, all of us, especially on the OEM side, will have to make a concentrated effort to move from a wholesale-based environment to a retail-based environment," he said.
Garg pointed out that many dealers leave ordering decisions entirely to their staff, instead of engaging directly with demand planning. "How many of you actually get involved in ordering vehicles yourselves? Forecasting may not look glamorous, but this is the most important. Even as COO, I still get into kit ordering, production planning, variant by variant, color by color. Because I know this is what drives profitability," he said.
Garg also highlighted how digital systems can support better planning. The nationwide adoption of the Vahan database, which records real-time registrations, could soon transform retail visibility. "With Telangana also joining in by January, probably all OEMs would want to shift fully to Vahan, which will again solve that problem. The GST cut, the festival coming in, the Vahan, and the market really kicking in well—all these things will take this problem away. But forecasting has to be dealer-driven too," he said.
Mahindra & Mahindra is pursuing the same goal through digitisation. Nalinikanth Gollagunta, CEO of M&M's Automotive Division and executive director of Mahindra Electric Automobile Ltd, described how the company has rolled out a new forecasting system. "The primary objective was to get to a level of granularity in forecasting which takes into consideration the highly dynamic market conditions. Dealers now put down to the last detail what product they want for the coming months, and we match that against retail momentum and past trends," he said.
The new system, which had been piloted for a few years before its formal rollout in January 2025, enables Mahindra to align production with dealer requirements almost in real time. Gollagunta described it as a work in progress that is showing promising trends. The platform allows the company to plan end-to-end in a more agile manner—synchronising production, managing parts commonality, and adjusting for seasonality—instead of pushing stock into the market without clear demand signals.
He contrasted this digital approach with the earlier reliance on spreadsheets, which were often used retrospectively rather than proactively. The current system, he explained, makes it possible to anticipate demand patterns and flag potential red signals much earlier. The added transparency also opens the door for more constructive discussions with dealers, as Mahindra can now compare specific requests against retail momentum and challenge whether certain variants are truly required, thereby making the supply chain more efficient.
The emphasis on forecasting comes at a time when the government has announced changes to GST policy. The industry expects these changes to spur demand across entry-level cars and two-wheelers, but for dealers, the transition comes with short-term pain. Inventory purchased before September 22 still carries the old cess, leaving them saddled with blocked credits that could strain working capital at precisely the time they need liquidity to ramp up sales.
Against this backdrop, automakers' focus on granular planning and collaborative forecasting is aimed at reducing the burden of mismatched supply. Garg stressed that Hyundai runs monthly schemes to clear aging stock, whether cars or spare parts, in order to protect dealers.