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Automobile Demand rebounds in May after zero sales in April

The Automobile Industry is witnessing an increase in demand post resuming operations in April end after Lockdown curbs were eased. The sales for the month of May has improved signifying that demand for automobiles has started to pick up. In April end, Auto Firms had opened factories on a limited scale and has used up to 20 per cent of installed capacities. 

In April, automobile sales were negligible. Though the sales have improved in May, they have slumped on a year on year basis because of several repercussions of Covid-19 Pandemic including disruption in Supply Chain, low consumer sentiment and stipulated enhancement in safety measures. The other big challenge that many companies have faced is increase in operating costs as truck fleet operators have started to charge a premium of 30 per cent to 40 per cent for services such as loading, unloading and transporting of finished vehicles, raw materials etc. This is because there is a shortage of drivers and support staff due to the current pandemic situation.

Maruti Suzuki India Ltd reported 18,539 vehicle sales in May. The company is planning to gradually increase its production capacity in the upcoming 6 months. Hyundai Motor India Ltd reported sales of 6,883 vehicles in May. Hyundai Motor India’s executive director for sales, marketing and Service, Tarun Garg said, “This performance was made possible on account of strong customer interest and demand-pull generated by trendsetter brands such as the Creta, Verna, Venue, Elite i20 and Grand i10 Nios”.

Mahindra and Mahindra Limited sold about 3,867 passenger vehicles in May and is sanguine on future sales. The Company’s Chief Executive Officer for Automotive division, Veejay Nakra said, “We are seeing initial traction for our small commercial vehicles and SUV brands such as the Bolero and Scorpio. As new lockdown norms are being announced, we are hopeful of demand gaining traction in the coming months”.

While the automobile firms are mainly optimistic about the future performance of sales, IHS Markit’s associate director, Puneet Gupta remarked that normalcy in Automobile Sales would take time, he said, “Since staggered lockdown was the only way India can minimize the loss of human capital, it is sure we have still had more months to go even before we get to the new normal. The challenges in India are acute when it comes to opening up the economy. Migratory population and cash flow issues will just put the industry in sleep mode for a few more weeks to come”.

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