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COVID-19 impact | Lockdowns ravage auto firms in May; sales seen at 11-month low

Lockdowns have forced car showrooms in major markets to shut down, which has reduced May sales to less than a third of the average since January this year, sector experts say.

May 31, 2021 / 06:29 PM IST
 
 
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Automobile companies are staring at their worst monthly sales performance in almost a year as lockdowns forced showrooms and factories to shut down in May.

Automakers are expected to report subdued performance in the monthly sales data which is expected on June 1, amid continuing lockdowns in many states.

Sales in May are estimated to have fallen to less than a third of the monthly average since January this year, according to market watchers. This translates to wholesale sales of 100,000-110,000 passenger vehicle units for May, only 30 percent of an average of 300,000 units clocked between January and April.

Many automakers had advanced their maintenance shutdown by a month to May, when only 15-20 percent of showrooms were open. Automakers had to work with lower number of workers while simultaneously dealing with Covid-19 cases.

Some companies like Maruti Suzuki and Hero MotoCorp extended their plant shutdown while others like Renault, Royal Enfield, Hyundai and Ford were forced to halt production following worker agitation for a few days. Semiconductor shortage and high absenteeism also impacted output during May, said automakers.

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“Our suppliers were working with 50 percent staff. The plant shutdown in May has allowed us to build up on parts supplies which will help in June. No doubt May would be a washout period for the industry,” said a senior executive of an automobile company from one of India’s top four companies.

States with complete lockdowns represent 50-60 percent of volumes across segments, according to a report by Emkay Global. Automobile showrooms won’t open in Maharashtra, which is the second biggest market for automobiles in India, until June 15. The lockdown in Kerala will continue till June 9 and till June 7 in Karnataka.

“Our April sales were down 50 percent but May has been worse than that. Our inventories have been low since the start of Q1. We are expecting June to be better, followed by a full ramp up in July,” said an executive of another carmaker.

“Most dealers we interacted with were shut in May’21. Inquiry levels and conversion rates are low. Customers with existing bookings are deferring their purchases to Jun’21, however cancellation of bookings are low (about 10 percent). Momentum in new bookings has slowed down to about 70 percent,” said a report from Motilal Oswal.



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Moneycontrol News
first published: May 31, 2021 06:29 pm
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