For the first time in the history of independent India auto makers posted zero sales in the domestic market. With nationwide lockdown since March 25, all channels – production, distribution, and dealerships – continue to remain closed leading to zero sales in April. However, with the ports opening in the last few days, some companies managed to export some consignments. For instance, Maruti Suzuki India said that it exported shipment of 632 units for the month of April, while its closest rival Hyundai Motor India registered exports sales of 1,341 units. Mahindra & Mahindra (M&M) also exported 733 units.
Another exception segment was tractors because agriculture and allied industries fall under essential services. As a result, there were some tractor sales reported by M&M, although much lower compared to April 2019. The company sold 4,716 units in the domestic market in April, a steep decline of 83% year-on-year. Total tractor sales, including exports, were at 4,772 units, a similar sharp fall of 83% y-o-y. The company recorded exports of 56 tractors. Hemant Sikka, president (farm equipment sector), M&M, said, “Going forward there were several positive factors including a good Rabi output, which should augur well for tractor demand.”
Auto industry executives said that they are awaiting the lockdown to be lifted to resume operations. Veejay Nakra, CEO (automotive division), M&M, said, “We are hopeful that our dealerships will open soon and have stocks to cover the first few weeks of sale”.
Naveen Soni, senior vice president, (sales & services), Toyota Kirloskar Motor, which also saw nil sales in April, said, “Restart of the entire value chain cycle and its restoration will be gradual as the industry is faced with the challenges of low consumer sentiments, rebuilding of disrupted supply chains that need factors of productions to be restored, including return of workforce etc.” He said that there has been some movement in the market as dealers are receiving some enquiries, and the company is ensuring that these customers are catered to once operations begin.
Maruti Suzuki India chairman RC Bhargava and M&M CEO and managing director Pawan Goenka have already said that they are in no hurry to start production as it makes no sense to do the same till dealerships are allowed to resume operations. Production does not make sense because the companies and their dealers are already saddled with high inventories.
As earlier reported by FE, the total inventory of passenger vehicles currently stands at around 2.6-3.00 lakh units, which is a tad higher than average monthly sales the segment was clocking before the lockdown at around 2.2-2.4 lakh. Further, for all the PV players like Maruti Suzuki, Hyundai Motor India, Tata Motors, Mahindra and Mahindra, and Honda Cars, the current inventory is far higher than their monthly sales during March.
For instance, Maruti’s inventory – including its stockyards and dealer networks – stands at around 130,000 units whereas its domestic sales during March was 78,344 units. Similarly, Hyundai’s inventory stands at 35,000 against March sales of 26,300.
