Home >Companies >News >Wholesale dispatches of passenger vehicles crashed in May

Automakers reported a sharp sequential fall in wholesale dispatches in May as production and vehicle supplies took a hit due to the explosive rise in covid-19 infections and related lockdown measures across the country.

Maruti Suzuki India Ltd—the country’s largest car maker—reported a 74.2% decline in sales to just 35,293 units during the month. The second largest manufacturer, Hyundai Motor India Ltd, also reported a drop in dispatches by 48.9% to 25,001 units.

Mumbai-based Tata Motors saw passenger vehicle wholesales fall by 39.5% to 15,181 units, while Mahindra and Mahindra’s dispatches dropped by 56.2% to 8,002 units.

Manufacturing and sales of automobiles came under pressure from the first week of April when Maharashtra announced 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 have either stopped production or cut output significantly.

Some manufacturers like Tata Motors and Bajaj Auto Ltd have been continuing with production with limited capacity to meet their export orders. Some companies also shut down plants after deliveries stopped. Sales are expected to remain subdued for the next two months.

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Sarvesh Kumar Sharma/Mint

But Veejay Nakra, chief executive officer, automotive division, M&M, was optimistic about the future.

“We are seeing a strong growth momentum for our entire product portfolio. The Thar is clocking robust bookings despite extended waiting periods. XUV300 has been a tremendous success and continues to see strong demand. Our power brands (Scorpio and Bolero) continue to do well. With the cases coming down and gradual opening up of markets, we foresee strong demand rebound. We are working closely with our supplier partners to manage supply chain issues and meet the market demand," he said.

With covid cases showing signs of a decline—albeit in the past one week—some automakers have resumed production, but only with single shifts.

On the commercial vehicle front, dispatches at Tata Motors slipped by 35% to 9,371 units. Ashok Leyland also reported a 65.6% decline in sales to just 2,738 units.

Commercial vehicle sales showed signs of a recovery from the third quarter of FY21 and automakers were expecting demand to grow substantially in FY22 as manufacturing activity and construction of infrastructure projects gathered pace.

With the second wave of covid infections penetrating deep into rural areas, unlike the first wave, two-wheeler manufacturers also saw limited dispatches.

Bajaj Auto reported domestic wholesale dispatches of just 60,342 units compared to 126,570 units sold in April. TVS Motor Company dispatched just 52,084 units during the month.

“Domestic sales in May are lower due to lockdowns in many states, but retails continue to be ahead of dispatches. We have reduced dealer stocks to support our dealers and channel partners and will produce to maintain adequate inventories for customer demand. We expect that pent-up demand will return as markets begin to reopen," TVS Motor said in a statement.

According to Mitul Shah, head of research at Reliance Securities, auto sales were impacted due to second wave-induced disruptions and lockdowns. This impacted retail sales, while inventory built up in anticipation of strong June sales led to better wholesale volume.

“The tractor segment has outperformed strongly with almost flat volume on the back of record high agri output and better monsoon prospects. We expect sales volume for the month of June would be much superior with healthy m-o-m improvement," he said.

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