Auto sector's domestic sales crash; exports negligible

Auto sector's domestic sales crash; exports negligible

New Delhi, May 1, 2020

India's domestic automobile sales stalled in April as the national lockdown imposed to curb the COVID-19 pandemic drove away customers and closed dealerships and factories.

The unique circumstances not only devastated the domestic retail sales but has now put a major proportion of jobs dependent on the sector in jeopardy, as nearly all the major players did not sell even a single unit in the domestic market.

To its credit, despite the lockdown, the industry did manage to ship out a negligible number of vehicles. Consequently, industry insiders opined that the downtrend is expected to continue as absence of backward and forward linkages will hamper the industry's ability to get back to the normal course of business anytime soon.

The latest challenge facing the industry has also been termed as its greatest yet, as customer sentiment is expected to be marred for some time to come post the lifting of the lockdown and many MSMEs who produce parts might not survive the economic fallout of the lockdown.

Notably, the industry in the recent past has come under immense pressure on account of the general slowdown, gradual shift from ICEs to EVs and the transition to BS-6.

The Federation of Automobile Dealers Associations' President Ashish Harsharaj Kale said: "April 2020, will be a month which the entire automobile industry would like to forget and implore that such a time never comes again in future. The entire country is under lockdown, the complete automobile ecosystem has been affected, right from the dealer to manufacturer to component manufacturer, everyone."

"To resume business, the entire automobile ecosystem has to come back to business as any of the members of the ecosystem if left out in lockdown condition will have a significant impact on the entire ecosystem, as the entire system is interdependent."

Automobile major Maruti Suzuki India reported nil domestic sales due to the extended national lockdown in April. However, the company did manage to export 632 units.

"This was because in compliance with the government orders all production facilities were closed," the company said in a statement.

"Meanwhile, following resumption of port operations, the first export shipment of 632 units was undertaken from the Mundra port, ensuring that all guidelines for safety were followed."

Similarly, Hyundai Motor India reported nil domestic sales for April, but managed to export 1,341 units.

Another major player Mahindra & Mahindra reported a massive decline of 98 per cent in its total vehicle sales in April 2020 to 733 units.

The company had sold a total of 43,721 units in April 2019. Furthermore, the company reported nil domestic sales last month. It sold 41,603 units in April 2019.

Only exports' segments showed some life. M&M exported 733 units in the month under review, which is a decline of 65 per cent on a YoY basis from 2,118 vehicles which were shipped out in April 2019.

Veejay Nakra, Chief Executive Officer, Automotive Division, Mahindra & Mahindra said: "At Mahindra, we are working hand in hand with all stakeholders, especially our dealer and supplier partners, to get our ecosystem started, once the lockdown is lifted. The safety of all our employees will be of paramount importance to us while resuming our operations."

"We are hopeful that our dealerships will open soon and have stocks to cover the first few weeks of sale. In the export market we have sold 733 vehicles during April."

The prolonged nationwide lockdown resulted in a similar result for Toyota Kirloskar Motor (TKM) in India during April.

"We were aware that there would be no sales in April due to lockdown enforced to contain COVID-19 spread in the country," said the Indo-Japanese joint venture vice-president for sales and services Naveen Soni in a statement.

The auto major sold 7,023 cars and exported 999 units of Etios model in March before the first phase of the 21-day lockdown was enforced on March 25.

In contrast, the company sold 12,818 units in the domestic market and exported 844 Etios cars the same month a year ago (2019).

"We expect the supply chain and retail disruption to continue to impact the sector going forward. It might take 2-3 months post the lifting of the lockdown for any normal activity to take place in the sector," Shamsher Dewan, Vice President, ICRA told IANS.

Sridhar V, Partner, Grant Thornton India LLP, told IANS: "The industry is waiting for the lockdown to be relaxed to get going but certainly has some stark challenges to face including labour, material and demand with the foremost being the disposal of existing inventory and then the rest."


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