Auto component suppliers are sitting on Rs 98,000 crore (Rs 980 bn) of inventory, the report said. The accumulation reflects slower domestic demand for vehicles and a mismatch between production schedules and retail offtake. The report attributed the stockpile to cautious buying by original equipment manufacturers and longer lead times for certain parts. The figure represents a significant portion of sector inventories and raises questions about supply chain resilience.

The elevated inventory burden has strained working capital for many suppliers and lengthened cash conversion cycles, particularly affecting smaller firms in the supply chain. The report highlighted that carrying costs and the risk of obsolescence have increased as components remain unsold for extended periods. Input cost inflation has added pressure on margins while turnover has weakened. Smaller vendors without diversified order books are most vulnerable to the cash squeeze.

The analysts urged suppliers to adopt tighter inventory management, enhance demand forecasting and coordinate more closely with vehicle manufacturers to align production with consumption. They recommended that lenders and policy makers consider targeted inventory financing to ease liquidity constraints and support operational continuity. Adoption of digital inventory tools was described as a means to improve visibility and reduce excess stock. Pilot programmes to monetise inventory were cited as a practical interim step.

Industry executives noted that normalisation of inventories will require a sustained recovery in vehicle sales and clearer signals from original equipment manufacturers on production plans. The report suggested that a combination of market measures and financing solutions could mitigate the immediate stress on the sector. It added that transparent data sharing between suppliers and OEMs would shorten cycles and improve resource allocation. The pace of correction will depend on demand momentum and implementation of the suggested measures.