Covid-19 effect! Auto sales in slow lane as 2nd wave hits despatches

While companies say that the demand for vehicles remains strong, they foresee challenges to supply chain, dealership activity and customer movement in the coming months, given the localised restrictions imposed by states in the wake of the second wave of the Coronavirus infections.

By:May 2, 2021 9:07 AM
Auto Sales in FY21

 

Wholesale despatches of automobiles have been impacted in April with all automakers reporting a decline compared to March. The numbers cannot be compared with those for April last year since a nationwide lockdown was in effect at the time. While companies say that the demand for vehicles remains strong, they foresee challenges to supply chain, dealership activity and customer movement in the coming months, given the localised restrictions imposed by states in the wake of the second wave of the Coronavirus infections. Maruti Suzuki, India’s largest passenger vehicle manufacturer, registered sales of 1.37 lakh units in April, a decline of 8.3% compared to March. While the sales increased marginally by 3% compared to April 2019, the recovery still seems sometime away as automobile sales fell nearly 17% compared to April 2018.

Hyundai Motor India recorded sales of 49,002 units in April, which was a month-on-month decline of 7%. Tarun Garg, director (sales, marketing & service), Hyundai Motor India Ltd., said, “While our efforts currently focus primarily on supporting the lives and livelihood of people, we have also received positive sales results in April 2021.” Tata Motors saw sales of 39,530 units in the domestic market, a sharp 41% decline compared to March. The company’s passenger vehicles business witnessed an m-o-m decline of 15% with sales volumes coming in at 25,095 units. The fall in the commercial vehicles segment was much steeper at 61% compared to March with sales of 14,435 units registered. This is in sharp contrast to the gains that the company was seeing in its commercial vehicles business in the last two months as economic activity in industrials and mining etc was picking up.

Mahindra and Mahindra (M&M) also saw a decline of 10% in auto sales compared to March with 34,432 units sold in April, largely driven by a fall in the commercial vehicles segment. Its passenger vehicle division, however, registered a 9.5% m-o-m increase with 18,285 vehicles sold. Veejay Nakra, chief executive officer (automotive division), M&M, observed that with the increase in lockdown restrictions in many parts of the country the company is foreseeing continuing supply chain-related production challenges. “While demand remains good, there would be some impact in the first quarter as a result of low customer movement and dealership activity due to the lockdown restrictions,” he said.

Two-wheeler sales also remained sluggish. Hero MotoCorp registered an m-o-m decline of 37% in wholesale numbers in April and sold over 3.42 lakh units. The company said the sales in April 2021 were subdued due to the temporary closure of plant operations and the retail outlets across several key territories in India on account of the impact of the second wave of COVID-19. The company has decided to extend the shutdown at its manufacturing facilities across India, its Global Parts Center (GPC) in Neemrana and the R&D facility in Jaipur by another six days till May 9, 2021. “The company is continuously monitoring the situation and aims to compensate for the production loss during the remainder of the quarter,” the company said in a statement.

Tractor sales, however, continued to remain robust and increased nearly five-fold to 26,130 units compared to April 2020, though on a lower base compared to last year. With agriculture and allied industries getting covered under essential services, the company had reported some tractor sales last year as well. Hemant Sikka, president (farm equipment sector), M&M, observed that though there have been disruptions in supply chain due to localised lockdowns and availability of oxygen along with dealerships in few states getting closed impacting demand, all agri-related fundamentals continue to remain strong with bumper rabi crop harvest and forecast of a normal monsoon. “We expect that tractor demand will bounce back as farmers start preparing their land for Kharif crops in the coming weeks,” he said.

Toyota Kirloskar Motor (TKM) saw a sharp m-o-m decline of 36% in auto sales to 9,622 units in April. Naveen Soni, senior vice president, TKM, said that despite the challenges, the company continues to witness good demand owing to personal mobility needs. Soni said that though the company has been able to partially fulfil pending orders by making use of the pipeline finished goods inventory, partial lockdown in different parts of the country has enhanced the gap between wholesale and retail. “Sporadic lockdowns impacting different states and cities for varying durations has increased logistical challenges to supply the right vehicle to the right dealership and at the right time,” he said.

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