Auto sales data for May shows gradual pickup in demand2 min read . Updated: 02 Jun 2020, 12:52 AM IST
Auto firms resumed operations in April end, utilizing barely up to 20% of installed capacities
India’s automobile industry showed initial signs of limping back to normalcy, with some of the major automakers notching up modest sales in May as they reopened factories on a limited scale.
Though the sales performance was a fraction of what the companies reported in the same month last year, they are a step ahead from the near negligible sales seen in April.
Several leading automakers resumed operations in end-April, utilizing barely 20% of their installed capacities due to issues such as constraints in supply of parts and enhanced safety measures as well as a drastic fall in demand with the coronavirus crisis denting consumer sentiment.
Companies have also been complaining about truck fleet operators charging a premium of 30-40% for loading, unloading and transporting finished vehicles, parts as well as raw materials due to the shortage of drivers and support staff, which has increased costs.
Maruti Suzuki India Ltd, the country’s largest carmaker, reported total sales of 18,539 vehicles in May, having resumed production in a phased manner at two of its factories last month after easing of the lockdown curbs.
The carmaker, which had sold 134,641 units in May last year, said it had restarted its Manesar plant from 12 May and Gurugram facility from 18 May, according to a company statement.
Since resuming operations, the Suzuki Motor Corp. unit has been utilizing around 20% of its capacity as the safety measures taken at its facilities have made the manufacturing process cumbersome.
The company plans to gradually increase its production capacity over the next six months.
“Since staggered lockdown was the only way India can minimize the loss of human capital, it is sure we have still have more months to go even before we get to the new normal," said Puneet Gupta, associate director at IHS Markit, a market researcher.
“The challenges in India are acute when it comes to opening up the economy. Migratory population and cash flow issues will just put the industry in sleep mode for a few more weeks to come," he said.
Hyundai Motor India Ltd, the country’s second-largest carmaker, posted domestic wholesales of 6,883 vehicles in May, sharply lower from 42,502 vehicles in the year-ago period.
The South Korean carmaker also exported 5,700 vehicles last month, taking the overall May tally to 12,583 vehicles.
Hyundai said in a statement that it has received close to 15,000 orders across models in May and 11,000 new cars were delivered to the customers during the month.
“This performance was made possible on account of strong customer interest and demand pull generated by trendsetter brands such as the Creta, Verna, Venue, Elite i20 and Grand i10 Nios," said Tarun Garg, executive director, sales, marketing and service, Hyundai Motor India.
Mahindra and Mahindra Ltd (M&M) sold 3,867 passenger vehicles in May, compared with 20,608 a year earlier, as it partially resumed operations across its production units and dealership network last month.
The company sold 5,170 commercial vehicles in May, declining from 17,879 a year earlier. M&M exported 484 vehicles last month, compared with 2,365 units in May last year.
“We are seeing initial traction for our small commercial vehicles and SUV brands such as the Bolero and Scorpio. As new lockdown norms are being announced, we are hopeful of demand gaining traction in the coming months," said Veejay Nakra, chief executive officer, automotive division, M&M.