2020-07-14 12:03:00
Auto sector

Domestic wholesale of passenger vehicles fell by 49.59% year-on-year to 1,05,617 units in June as demand for vehicles fell significantly due to the economic slowdown. Automakers are struggling to ramp up manufacturing operations due to disruption in the supply chain, according to data released by the Society of Indian Automobile Manufacturers (Siam) on Tuesday.

Factory dispatches of passenger cars during the period declined by 57.98% y-o-y to 55,497 units, while the same for utility vehicles dropped by 31.16% y-o-y to 46,201 units.

Automobile sales in India are counted as factory dispatches and not retail sales.

With retail sales picking up after the removal of the lockdown in May, most manufacturers are trying to ramp up production according to the demand. Factors like rising cases of covid-19 and lack of availability of manpower have limited the ability of auto makers to increase production of vehicles.

The covid-19 crisis has added to the woes of India’s auto sector, which has been battling headwinds like a liquidity squeeze and decline in consumption demand over the last year and half, which has impacted sales across categories.

According to Rajan Wadhera, president, Siam, the automobile industry will take another 3-4 years to reach the 2018 level of vehicle sales without any demand stimulus from the government and profitability of most companies are under pressure sine most of them invested significantly for transition to Bharat Stage VI emission norms.

“There (are) lots of issues in the supply chain network due to continued restrictions in certain parts of the country. Also there is a lack of manpower since people have moved back to villages. There is a huge challenge on the supply side which is restricting wholesales now. Rising cases of covid-19 has around factories of member companies has also impacted production. Demand now is just 40%-50% of the corresponding quarter last year,” added Wadhera.

The lobby group is expecting a decline in the range of 26-45% in domestic sales across vehicle categories due to the covid-19 induced economic slowdown.

In the two-wheeler segment, scooter sales fell by 47.37% y-o-y to 2,69,811 units while motorcycles dropped by 35.19% y-o-y to 7,02,970 units. Overall, two-wheeler sales fell 38.56% to 10,13,431 units.

Sales of two wheelers have picked up faster compared to the other segments due to quicker recovery in demand in the rural and semi-urban areas compared to the metro and tier 1 cities. A good summer crop, decent monsoon and comparatively low spread of covid-19 infection have aided the recovery in rural markets.

Siam did not provide wholesale dispatches of commercial vehicles during the month.

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