Auto Sales Chart Completely Out of Order Amidst COVID-19 Outbreak
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- Passenger vehicle sales have dropped to 251,516 units
- The industry is in the middle of a 21-day nation-wide lockdown
- The estimate of 15,000 unsold BS4 units and SUVs are left with dealers accruing a loss of several crores of rupees
Following the coronavirus pandemic, several industries have raised stability concerns and the automobile is one of them. Before this, the sector was already struggling with the declining demand as car manufacturers were aligning their stocks in the light of the new BS-VI regime. But the outbreak has only heightened the disruption.
Wuhan, the epicenter of COVID-19, was also the biggest supplier of key auto components to some of the major companies and so, its lockdown led to a major loss across all vehicle segments, including the passenger, commercial and two-wheelers. According to a report by the Society of Indian Automobile Manufacturers (SIAM), passenger vehicle sales have dropped to 251,516 units; commercial vehicles fell to 58,670 units, and motorcycles to 816,679 units in February 2020 alone.
When first 100 cases were registered in India, some of the largest auto manufacturers took proactive calls by bringing their operations to a standstill: Maruti, Hero MotoCorp, and Bajaj Auto had shut their plants in Gurgaon and Pune till March 31; Mahindra & Mahindra closed their manufacturing units in Mumbai and Nagpur; and even global auto manufacturers such as Fiat and Mercedes suspended their operations along with Tata Motors, Hyundai and HondaCars.
And now, the industry is in the middle of a 21-day nation-wide lockdown that has brought everything to a halt. Looking at the market growth, experts fear a production loss of about Rs 50,000 crore to the $120 billion domestic industry.
The future seems bleak for the automobile sector as the buyers are avoiding store visits in the wake of the coronavirus outbreak and the effective lockdown, retail of the business has had a few hiccups throughout March ending in the financial year in a bad shape. On top of it, car dealers are still struggling with their BS4-complaint stock which had a deadline of March 31st and now that seems impossible. An estimate of 15,000 unsold BS4 units and SUVs are left with dealers accruing a loss of several crores of rupees. Industry leaders and experts suspect the slowdown will hit the motorcycles sales the most. There was a 22% decline in February 2020 alone and with such numbers, the situation is quite alarming, and the lockdown is just going to aggravate it. Adding scooters to the list would take the charts as high as 7,00,000 unsold units in the two-wheeler section.
Regardless of whether operations resume from 15th April, the comeback will be weaker. It will almost be like building from scratch as buyers will not instantly return to the showrooms anytime soon. Manufacturers will have to look for alternatives to fulfill their dealership demands and this might take a long time to reach a stable production level as the process is controlled by regulated bodies. However, there’s hope for government intervention with new reforms, measures, and policies to help the industry live through this challenging phase.