Passenger vehicle sales in India plunged 52% in March from a year earlier as government restrictions to limit the spread of covid-19 forced dealers to shut showrooms. With the three-week lockdown to be lifted only on 15 April and weak consumer sentiment, this month may prove to be even more disastrous for automakers.

Maruti Suzuki India Ltd, Hyundai Motor India Ltd, Mahindra & Mahindra Ltd (M&M), Tata Motors Ltd and Toyota Kirloskar India Pvt. Ltd, which together make up about 85% of the overall domestic passenger vehicle market, sold a total of 111,600 vehicles in the past month, according to sales data published by these companies and compiled by Mint.

Automobile demand in India took a hit since mid-March as customers, wary of the fast spreading coronavirus and the importance of maintaining social distancing, avoided automobile showrooms. Sales braked to a halt last week with the Union government imposing a three-week national lockdown.

Maruti Suzuki, India’s top carmaker, posted a 47% drop in total passenger vehicle sales in March at 76,240 vehicles. The weak performance was mainly due to a 51% year-on-year (YoY) drop in sales of compact cars such as the Swift, Baleno, WagonR and Dzire at 40,519 vehicles. In the utility vehicle category where Maruti sells the Vitara Brezza, S-Cross and XL6 models, sales dropped 53% to 11,904 units.

“Sales during March 2020 are not comparable with sales in March 2019 due to the suspension of operations with effect from March 22nd, in line with national policy,” the Suzuki Motor Corp. unit said in a regulatory filing.

Maruti ended FY20 with an 18% YoY drop in vehicle sales at 1.41 million vehicles.

Besides the covid-19 outbreak, FY20 saw automakers battle several challenges such as a liquidity crunch, dealerships shutdowns and low consumer sentiment.

Already considered the worst in two decades for the domestic auto industry, the year also saw companies make investments to migrate to the stricter Bharat Stage-VI (BS-VI) emission norms from Wednesday.

Puneet Gupta, associate director at IHS Markit, said the next weekwould be decisive as it would give visibility into whether coronavirus cases in India rise rapidly or it is able to flatten the curve. “In both cases, April too looks like a disaster for auto sales,” he said, adding that a young population and higher temperatures may work in favour of India combating the spread of covid-19.

Hyundai reported domestic sales of 26,300 units, down 41% YoY. The Korean carmaker, which concluded the last fiscal with a 11% YoY decline in domestic sales, however, saw 5% YoY growth in its export shipments.

M&M’s passenger vehicle sales fell a sharp 88% YoY to 3,384 units in March. Veejay Ram Nakra, chief executive officer, automotive division, M&M, said the company’s performance in March was muted on account of the impact of the current lockdown related to covid-19 and the disruptions in its BS-VI ramp-up plan.

Tata Motors posted sales of 5,676 passenger vehicles, down 68% YoY. Mayank Pareek, president of the passenger vehicles business unit at the company, said sales were affected by the covid-19 outbreak and the subsequent lockdown.

Meanwhile, Toyota, which posted a 45% YoY drop at 7,023 vehicles last month, has issued a dealer advisory assuring a relief package to help them maintain their cash flow.

Care Ratings Ltd said in a recent report that buying sentiment after lifting of the lockdown is expected to subdued and consumers will be cautious in spending, particularly on luxury or big-ticket items.

News Source: Livemint


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