Zero sales driving India's auto sector to appeal for restart

05, May. 2020

India’s Mahindra & Mahindra showcases its new Alturas G4 model at the 2020 Auto Expo in the northern Indian city of Greater Noida on Feb 5, 2020. The automaker reported zero domestic sales in April. (NNA)
India’s Mahindra & Mahindra showcases its new Alturas G4 model at the 2020 Auto Expo in the northern Indian city of Greater Noida on Feb 5, 2020. The automaker reported zero domestic sales in April. (NNA)

By Atul Ranjan

NEW DELHI, NNA - India’s 40-day nationwide lockdown, which started in March, has taken such a catastrophic toll on its automotive industry that automakers suffered zero domestic sales in April for the first time ever.

It has brought three key auto industry bodies together to issue an urgent plea to the government to allow the entire automotive value chain to “re-commence operations in unison”.

Making their appeal in a joint letter last Friday were the Federation of Automobile Dealers Associations (FADA) or the apex national body of the automobile retail industry, the Automotive Component Manufacturers Association of India, and the Society of Indian Automobile Manufacturers.

They said the sector is losing 23 billion rupees ($303 million) each day during the lockdown.

“The automotive industry in India, which was already facing a severe downturn for over 15 months, with this lockdown, is now confronted with total disruption of its entire value chain,” the letter said, adding that several industry groups including component suppliers and dealerships are struggling to stay solvent.

Their call for help came as the government announced last Friday a further extension of the coronavirus-induced lockdown by another two weeks starting on Monday.

“April 2020 will be a month which the entire automobile industry would like to forget and implore that such a time would never come again in future,” said Ashish Harsharaj Kale, president of FADA, in a press statement on Friday.

Major automakers such as the country’s largest passenger car maker Maruti Suzuki India Ltd., a subsidiary of Suzuki Motor Corp., have reported zero domestic sales in April. Others include Toyota Kirloskar Motor Pvt. Ltd.; Honda Motorcycle & Scooter India Pvt. Ltd.; Hyundai Motor India Ltd. and local automaker Mahindra & Mahindra Ltd.

While Naveen Soni, senior vice president of sales & services at Toyota Kirloskar, was not surprised by the disastrous April inactivity, he said the ongoing pandemic has exacerbated the already prevalent pressures on the industry. The lockdown to curb the spread of the coronavirus infection has forced the closure of dealerships and manufacturing operations in the automotive value chain to come to a grinding halt, he said in a statement.

Although the government is extending the lockdown till May 17, it is easing restrictions in its aim to reopen the economy gradually but cautiously.

It issued new guidelines to regulate various activities during the lockdown period, based on the risk profiling of the districts of the country according to red, which is designated for coronavirus hotspots, orange and green zones.

All industrial activities are now permitted in rural areas. In urban places, industrial activities in industrial estates, special economic zones and industrial townships are also allowed but they must meet certain safety conditions.

Transportation by air and rail and interstate movement of people by road continue to be prohibited across the country. Schools, hotels, eateries, bars, malls, theaters and places of worship remain closed nationwide.

However, FADA believes automobile retail sales would still face headwinds despite partial lifting of the shutdown.

“Yes, dealerships are opening in green and orange zones. But I don’t see much retail sales happening till the countrywide lockdown is completely lifted,” Saharsh Damani, CEO of FADA, told NNA on Sunday.

He said most showrooms could not open immediately as dealers would have to ascertain the zoning category of their locations.

According to the Confederation of Indian Industry’s latest survey released last Saturday, a majority of the firms in the country continues to expect a significant decline in their topline but they feel this might be worsened by a prolonged nationwide lockdown delaying economic revival and demand recovery.

As of Monday night, India reported 42,836 confirmed cases of coronavirus infection and 1,389 deaths.