Slowdown + Lockdown: India’s Auto Sales Log Worst Slump In March
India’s automakers witnessed the worst-ever slump in sales as a prolonged slowdown and now the world’s biggest lockdown to contain the coronavirus pandemic stalled operations.
Domestic sales of passenger vehicles tumbled 51 percent year-on-year to 143,014 units in March, according to data released by the Society of Indian Automobile Manufacturers. That’s the worst decline since 1997-98 when the auto industry body started recording data.
While car sales fell 52.12 percent over the last year to 85,229 units last month, shipments of utility vehicles declined 44.67 percent to 51,569 units. Monthly factory-gate sales of commercial vehicles dropped the most across categories — 88.05 percent year-on-year to 13,027 units.
Auto and auto component makers—which together contribute more than 7 percent to India’s gross domestic product—are facing a trifecta of troubles. First, an increased upfront insurance cost, coupled with a broader consumption slowdown in the economy, hurt sales. While deep discounts helped cushion sales a bit during the festival season and in December, both retail sales, measured by registrations, and wholesales tumbled in the last three months due to disruption caused by BS-VI emission norms. And now a nationwide lockdown to combat the Covid-19 pandemic has stalled operations at companies and dealerships.
Here’s how each segment fared in March:
- Scooter sales fell 32.09 percent over last year to 263,181 units.
- Motorcycle sales declined 41.89 percent year-on-year to 570.860 units.
- Total two-wheeler sales fell 39.83 percent year-on-year to 866,849 units.
- Three-wheeler sales tumbled 58.34 percent to 27,608 units.
India’s passenger vehicle sales in 2019-20 fell 17.82 percent over last year—also the worst ever—to 21,548,494 units.
March 2020 was one of the most challenging months for the auto sector as the 21-day lockdown resulted in bringing the production and sales of vehicles to a standstill, Rajan Wadhera, president at SIAM, said. “The auto industry is losing Rs 2,300 crore in production turnover for every day of closure. As the revenues took severe hit, the OEMs struggled on to meet fixed cost and working capital requirements.”
Wadhera, however, said the auto industry was engaged in a dialogue with the Indian government on policy measures that could minimise the impact of Covid-19. “There would be challenges on the supply side, demand side and on the issue of availability of finance which would all need to be addressed to bring back growth in the sector.”