Auto sales may see 25-45 percent drop in Q1

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MUMBAI: Indian automakers could report the worst demand decline in almost three decades in the three months to June, with wholesale dispatches and retail sales of passenger vehicles (cars and UVs) contracting drastically in the quarter that coincided with arguably the world’s strictest and most comprehensive lockdown to prevent the coronavirus from spreading.

The industry could see an overall decline of 25-45% in Q1, with heavy commercial vehicles expected to see de-growth of 50%, touching sales levels of 2008. According to industry estimates, PV wholesale figures may shrink to 1.5 lakh units from 8.73 lakh units. Retail sales could fall to 2.5 lakh units from 7.94 lakh units recorded last year.

“Even as the industry is looking forward to a better sales performance in June, plant level capacity utilisation is just 20-40%,” said Rajan Wadhera, president, SIAM.

“Though the May sales figures were just a timid reflection of what the companies reported in the same month last year, they are still better than the big zero of April,” said Pawan Goenka, MD at Mahindra & Mahindra, at an ET Auto conference last week. He mentioned that segments like SCVs, small cars and two-wheelers have seen a good pick-up in demand with rural sales.

Industry watchers say demand will depend on fundamentals of the economy and on how the Covid situation evolves. Shashank Srivastava, executive director, marketing, Maruti Suzuki, said, “In June, almost 90% of the dealer outlets were open and in the case of Maruti Suzuki, 2,800 of 3,087 dealerships opened up.”

Ecommerce and focus on personal mobility are benefiting certain pockets of the market. “Segments such as two-wheelers are facing a demand issue as they have now reached 65-70% production levels, while e-commerce has triggered growth for small and medium commercial vehicles,” Wadhera added.

However, what remains a major worry is the truck business.

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