Sordid memories of 2020 are back. As cases of COVID-19 continue to surge in Maharashtra forcing the state to impose total lockdown on weekends, the automotive dealer community is bracing for yet another disruption.
The Uddhav Thackeray-led government will start imposing a weekend lockdown that will begin every Friday evening and extend till Monday morning.
Maharashtra remains the worst affected state contributing more than 50 percent to the total number of COVID-19 cases in the country, as of April 5.
Such a partial lockdown measure will most likely impact demand for automobiles in the state as Saturday and Sunday generate nearly half of the enquiries and 40 percent of sales for the entire week, according to dealers.
Mumbai and Pune contribute the most to the state’s total automobile sales.
Maharashtra generates 10-11 percent of all-India automotive sales and is the second biggest market after Uttar Pradesh in terms of volume sold. But the state is the highest revenue generator (automotive tax), according to data shared by the central government controlled VAHAN portal.
“Normally Saturday is not that much, but together with Sunday they account for 40 percent of the week’s sales and 45 percent of the week’s walk-ins”, said Vinkesh Gulati, president of the Federation of Automobile Dealers Association (FADA).
Though many automakers took to developing tools online for facilitating car booking and buying virtually after the six-week lockdown crippled retail demand, customers were still queuing up outside showrooms for a physical experience of the vehicle as soon as the showrooms opened for business.
While the April-May 2020 lockdown, announced by the Centre, allowed dealers of tractors to keep their showrooms open for business, the state government of Maharashtra has not clarified if the same practice would be followed during weekends now.
During FY20 more than 300 dealerships shut shop, forcing carmakers like Maruti Suzuki and Tata Motors to roll out assistance programmes. For the current year, there hasn’t been any closure of dealerships as per FADA but there has been the odd case, like a Honda Cars India dealership that shutdown in Chembur, Mumbai.
“Not only will the weekend lockdown impact retail demand, it will also hamper delivery schedules. We will have two less days to take delivery of vehicles from the manufacturers and hand it over to the customers. This will create logistics issues as well”, said a prominent auto dealer from the Pune region.
As per the sales data released by manufacturers of passenger vehicles (PV), 11 of the 14 producers, who control 99 percent of India’s domestic car demand, recorded a 126 percent jump in March sales compared to the same month last year.
Though the low base effect must be factored in for the month, the sales were still higher than February and January.
While vehicle registration data for March is awaited (to be released by FADA), February saw 11 percent increase in PV volumes and 19 percent jump in tractor volumes during March.
Around 56 percent dealers expect growth in March sales, while 19 percent fear a de-growth with 25 percent expecting a flat performance during the month.
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