Home >Companies >News >Second wave slams brakes on auto retail sales in May

NEW DELHI : Retail sales of automobiles across categories plunged for the second straight month in May, industry data showed, as coronavirus cases exploded and states went into lockdowns to contain the second wave of the pandemic.

Showroom sales of passenger vehicles plunged 59% last month compared with April to 85,733 units, data released by Federation of Automobile Dealers Associations (Fada) on Thursday showed.

The auto industry came under pressure from the first week of April when Maharashtra imposed strict lockdown measures. Delhi, Haryana, Karnataka, Tamil Nadu and others followed suit. Maruti Suzuki India Ltd, Hero MotoCorp Ltd, Hyundai Motor India Ltd and others either stopped production or reduced output significantly.

Some like Bajaj Auto Ltd, however, continued to operate with limited capacity to meet export orders. With a steady drop in infections, especially in north and south India, most automakers have resumed operations from the middle of May.

Vehicle sales are usually compared on a corresponding basis, but in April last year, automakers had to shut factories and showrooms as the government imposed a strict nationwide lockdown from March. Subsequently, operations remained suspended till first week of May and in some cases, early June.

Vinkesh Gulati, president, Fada, said the second wave of the pandemic has left the entire country devastated as it affected most households. Rural areas were also severely impacted this year unlike the first wave which was mainly concentrated in the urban areas.

“Auto retail fraternity is in dire need of support. While a handful of OEMs (Tata Motors–CV, Renault, Bharat Benz and Honda Motorcycle and Scooter India) have announced financial help to their channel partners, others are yet to do so. Hence, Fada humbly requests all those OEMs which have still not announced any financial assistance to kindly do it urgently," Gulati said.

The surge in coronavirus cases has also taken a toll on manufacturing and construction activity, affecting demand for commercial vehicles with sales dropping 66% sequentially in May to 17,534 vehicles.

Two-wheeler sales fell 52.5% to 410,757 units in May as the spread of infections in rural areas led to a sharp fall in customer sentiment during the marriage season. Demand for two-wheelers, especially in the entry-level segment has been softening for the past few months due to an increase in vehicle prices and resumption of public transport.

Overall vehicle sales fell nearly 55% to 535,855 units in April.

“Covid second wave led disruptions and local lockdowns have impacted retail sales during the first half of the month. There are clear visible signs of slowdown in the rural economy at present. Moreover, passenger segment volumes are impacted by supply constraints of key components. On the other hand, tractor continues to show better traction with relatively lower decline," said Mitul Shah, head of research at Reliance Securities.

He added that the deadly second wave and fear of a third covid wave might continue to impact consumer sentiment and automobile sales currently, a strong bounce back is expected from the September quarter onwards on the back of favourable monsoon and healthy farm output.

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