Auto Dealers’ Lobby Doesn’t Expect Demand To Recover Anytime Soon
A vehicle moves in front of a Hyundai Motor Co. Koncept Hyundai showroom in New Delhi, India. (Photographer: Anindito Mukherjee/Bloomberg)

Auto Dealers’ Lobby Doesn’t Expect Demand To Recover Anytime Soon

Automobile dealers don’t expect demand to recover anytime soon, especially in urban regions, despite lockdown curbs being eased.

The first 10 days of June witnessed extremely low demand despite most dealerships resuming operations, according to Ashish Kale, president at the Federation of Automobile Dealers Associations.

“Weak consumer confidence, especially in urban areas, continues to haunt as buyers stayed away from concluding their purchase due to threat of community spread [of virus] and return of the complete lockdown,” Kale said. “The government’s push for infrastructure spending and recent measures announced for agriculture sector, however, will help support rural demand.”

Vehicle registrations, a measure of sales at dealerships, tumbled 89% year-on-year in May after a washout in April. All categories witnessed a contraction. Sales of commercial vehicles fell the most among segments.

India’s automakers have been trying to push sales since the Diwali festival season in 2018. First, an increased upfront insurance cost, coupled with a broader consumption slowdown and disruptions caused by BS-VI emission norms, hurt sales. Then the recent nationwide lockdown to combat the Covid-19 pandemic completely stalled operations at companies and dealerships.

“For the first time in history, the month of April witnessed zero retails. As the lockdown was gradually relaxed beginning May, auto dealerships and workshops opened for the first time after 40 days in many cities,” Kale said. “At the end of May, out of 26,500 outlets, about 60% showrooms and 80% workshops were operational across the country. May registrations are hence not indicative of the demand situation as the lockdown still continues in many parts.”

Note: The dealers’ lobby didn’t disclose the inventory data due to Covid-19-related disruptions. It’s expected to resume from June.

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