NEW DELHI: Even as India effects a calibrated exit from the nationwide lockdown and economic activity resumes, demand for automobiles is nowhere near the pre-COVID era. Retail auto sales in May fell as much as 89 per cent and going by the early trend there hasn’t been much action in the first two weeks of June.
"At present, demand for cars is 65-75 per cent lower than pre-covid days despite multiple offers and easy EMI options," said a manager of New Delhi based-Maruti Suzuki Nexa dealer showroom.
Similarly, a reputed dealer at Hyundai Motors said tha they are facing difficulties in delivering vehicles. "There continues to be waiting period for certain models as production was severely impacted. This coupled with low demand in urban centres isn’t a good news," he said.
At present, most of the carmakers are manufacturing at 30-40 per cent capacity and have about 85 per cent of showrooms opened. The number, however, is higher for two-wheeler makers.
For instance, Royal Enfield informed opening 90 per cent of its touch points. The tepid demand for vehicles comes amid wide expectation of sales surge for small cars and two-wheelers as people would prefer personal mobilty over public transport.
In countries such as China where cases of COVID-19 first came out, auto sales in May rose 14.5 per cent from the same month a year earlier, industry data showed. Experts believe economic uncertainty and possibility of another lockdown is preventing buyers to make big ticket purchases.
"The first 10 days of June witnessed extremely low demand despite most dealerships open. Weak consumer confidence especially in urban areas continue to haunt as customers stay away from concluding their purchase due to threat of community spread and return of complete lockdown persists," FADA President Ashish Harsharaj Kale said.
On outlook for the sector, Care Ratings noted it continues to remain grim with no definite signs of improvement in near future. "If another lockdown is imposed, auto sales numbers will continue their downward trajectory, which will seriously affect large workforce and companies may have to further delay their product launches and capex plans," it said.
Ratings agency CRISIL also expects a 60 per cent fall in domestic dispatches in the first half of this fiscal in line with staggered opening of dealerships Tarun Garg, director (sales, marketing and service), HMIL said, "The new demand is indicating towards personal mobility being preferred over shared mobility. We expect an increase in traction for compact and used car segments."