India auto sales recover poorly in May

12, Jun. 2020

New cars being produced at Hyundai Motor India Ltd.’s plant at Sriperumbudur in the southern Indian city of Chennai. The carmaker rolled out 200 cars on the first day of production restart on May 8, 2020. (Photo courtesy of Hyundai Motor India)
New cars being produced at Hyundai Motor India Ltd.’s plant at Sriperumbudur in the southern Indian city of Chennai. The carmaker rolled out 200 cars on the first day of production restart on May 8, 2020. (Photo courtesy of Hyundai Motor India)

By Atul Ranjan

NEW DELHI, NNA- Sales of all types of vehicles in India picked up in May but still continued to reel under the impact of the COVID-19 pandemic after not a single unit was sold in the throes of nationwide lockdown in April.

Although showrooms managed to sell 202,697 units as they slowly emerged from the economic shutdown last month, the performance was still a sharp fall of 88.9 percent from the 1,821,650 units sold in May last year, according to data released by the Federation of Automobile Dealers Associations (FADA) on Thursday.

Leading sales were motorcycles which sold 159,039 units, followed by passenger cars at 30,749. Even much lower figures were reported for tricycles (1,881), commercial vehicles (2,711) and tractors (8,317).

However, FADA was quick to state that the May retail figures were not reflective of a normal situation as huge swathes of the country were still under lockdown.

Only about 60 percent of the country's 26,500 showrooms managed to open by end-May after movement restrictions were eased gradually, said FADA.

Its outlook for June continues to be grim.

Demand during the first 10 days of June was “extremely low” as people, especially in urban areas, have continued to stay away from showrooms due to the threat of community spread amid the growing number of coronavirus cases in the country, said the association.

“Retail sales in June are likely to witness a de-growth upwards of 25 percent year-on-year,” said FADA.

Industry lobby group Society of Indian Automobile Manufacturers and credit rating agencies such as Crisil Ltd. and India Ratings and Research Pvt. Ltd. recently warned of sales declining by over 20 percent in the country.

In a statement released on Thursday, Anuj Sethi, senior director of Crisil Ratings, said, “With muted income growth, discretionary spending will take a backseat this fiscal. Also, given increasing awareness about social distancing, consumers may reduce, if not avoid, travel by public, pooled and shared transport in the short term.”

According to India Ratings and Research, vehicle exports are also likely to face strong headwinds in the current fiscal year ending March 2021.

Oil dependent countries which account for 30 percent of the country’s total auto exports, are suffering the brunt of falling crude oil prices apart from the impact of the pandemic, said the rating agency in its June 9 report.

“A sharp decline in crude oil prices and the likelihood of a subsequent weakening of the currencies of those nations could make imported vehicles costlier for them,” it concluded.