Auto Industry Continues To Face Heat, Vehicle Retail Plummets To 70.69% Compared to May 2019

Categories such as two-wheeler (2W), three-wheeler (3W), private vehicle and consumer vehicle saw a drop in registration of 53 per cent, 76 per cent, 59 per cent and 66 per cent respectively
Auto Industry Continues To Face Heat, Vehicle Retail Plummets To 70.69% Compared to May 2019
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India’s auto industry, one of the most stressed sectors, continues to reel under the ongoing pandemic. According to the Federation of Automobile Dealers Associations (FADA), in May, the total vehicle registration fell by 54 per cent month-on-month and 70.69 per cent compared to May 2019.

Categories such as two-wheeler (2W), three-wheeler (3W), private vehicle and consumer vehicle saw a drop in registration of 53 per cent, 76 per cent, 59 per cent and 66 per cent respectively. Tractor category, which was consistently on the positive side too saw a downfall in the registration numbers for May at 57 per cent.

Commenting on the new figures, Vinkesh Gulati, president of FADA said, “ The 2nd wave of covid has left the entire country devastated as there may not be a single household which did not get affected. Apart from urban markets, this time, even rural areas were badly hit. May saw continued lockdown in most of the states.”

He underlined that the auto fraternity is in dire need of support and mentioned that apart from a few OEMs who have provided financial assistance to their channel partners, others are yet to follow suit.

The current lockdown has already lasted over 30-45 days and is still in place in South India and revenues for most of the dealers are negligible because of negligible sales. FADA has highlighted that dealers will not be able to repay their loan tranche payment which is getting due.

“This will ultimately lead towards default. Since there are no guidelines, extension of tranche is considered as restructuring of loan. This will ultimately have a negative impact on Dealers credit score as their CIBIL rating will get impacted,” Gulati stressed.

FADA also appealed to the Prime Minister and suggested that instead of restructuring, banks should allow a moratorium of 90 days to all categories of dealers without keeping a turnover limit. 

However, the first nine days of June saw a slight rise in demand, preferably due to the pent-up demand. FADA expects if the trend continues then, sales number will be similar to last year’s June.

The monsoons arrived in India almost on time and if Met predictions are right, FADA anticipates that there will be a rise in demand for vehicles in rural India.

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