The Invisible Cars of India: Unveiling the Truth Behind 3,00,000 Missing Vehicles

The Curious Case of 3,00,000 "Missing" Cars: Unveiling the Ghost Cars of the Indian Automobile Market

In a recent twist in the Indian automobile industry, an astonishing 3,00,F000 vehicles valued at a staggering ?28,000 crores have been reported "missing." But before you start picturing a grand heist, let’s clarify—these cars aren’t lost. They’re just not where they should be—on paper. This peculiar situation has sparked a rift between two of the most influential bodies in the industry, the Federation of Automobile Dealers Associations (FADA) and the Society of Indian Automobile Manufacturers (SIAM).

The Ghost Cars: What’s Really Happening?

These so-called "missing" cars are actually sitting idle in dealer lots, fully manufactured and ready to hit the road but not officially documented as sold. They are known in industry lingo as Ghost Cars or BBND (Billed but Not Retailed) vehicles. The root of this problem lies in the complex relationship between Original Equipment Manufacturers (OEMs) and their authorized dealers.

Here’s a closer look at the process:

• OEMs are the big brands that manufacture vehicles.
• These OEMs appoint dealers as authorized resellers.
• When a customer buys a car, it’s typically through these authorized dealers.

OEMs provide a supply chain and IT system to dealers, enabling them to track everything from inquiries and bookings to retail sales and inventory levels. These systems are crucial for OEMs to strategize and plan their production and sales targets. However, this well-oiled machine occasionally hits a snag—especially when sales targets are involved.

The Pressure Cooker: How Targets Lead to Ghost Cars

OEMs set ambitious wholesale and retail targets for their dealers, incentivizing them with monetary and non-monetary rewards. But when market conditions aren’t favorable, dealers sometimes find themselves between a rock and a hard place. To meet these targets and secure the associated incentives, dealers might report a vehicle as sold on the OEM’s system, even though it’s still sitting on their lot. Often, this is done under pressure from the manufacturers. The result? A Ghost Car—a vehicle that appears sold in the OEM’s records but has never been registered with the local RTO or driven on the road.

This leads to a classic bullwhip effect: OEMs, misled by inflated sales figures, ramp up production and set even higher targets, creating more Ghost Cars in a vicious cycle. Dealers, burdened with unsold inventory, can’t seek help from the OEMs because, according to the system, these cars don’t exist.

Who’s Really Losing Out?

At first glance, it seems like dealers are the biggest losers, with rising inventory levels and no support from OEMs. Banks, too, are at risk, as they’ve financed these unsold vehicles. But the OEMs themselves are playing a dangerous game. With thousands of Ghost Cars gathering dust in stockyards, the visibility of their vehicles on the road plummets. This could eventually lead to a scenario reminiscent of Coca-Cola’s strategic acquisition of Thums Up.

A Cautionary Tale from the Beverage Aisle

When Coca-Cola acquired Thums Up, they bought out all available Thums Up stock from retailers, creating a visibility vacuum on store shelves. Coca-Cola then filled that space with their products, boosting their visibility and demand. Thums Up’s team failed to recognize this, leading to a decline in their market presence—a lesson that the automobile industry must heed.

Finding a Solution: How to Break the Cycle

So, what’s the way out of this quagmire? Reducing the bullwhip effect is crucial. OEMs must set realistic targets based on rational calculations. One way to achieve this is by leveraging data from the Vahan portal, which offers free access to RTO registrations across India. By analyzing this data, OEMs can assess their market share and adjust their production plans, ensuring that their vehicles are not just on the system but also on the road.

In conclusion, the issue of 3,00,000 missing cars is not about a physical disappearance but a systemic flaw. By understanding and addressing the root causes, the industry can prevent the creation of more Ghost Cars and ensure that vehicles move from the showroom to the streets, where they belong.