COVID-19 lockdowns hurt May auto sales, but recovery looks imminent
What's the story
As the COVID-19 second wave ravaged the country, the ensuing lockdowns had a significant negative impact on the economy. For instance, Maruti Suzuki India, the touchstone for the Indian auto industry, has recorded a massive 71 percent decline in sales growth. The country's largest carmaker sold 46,555 units in May, which pales in comparison to 1,59,691 units sold last month prior to the lockdown.
Recovery
Maruti's sales recover as factories gradually resume production
While the MoM sales data looks bleak, the YoY sales numbers saw a 140 percent increase. However, that's primarily due to the prolonged pandemic-forced lockdowns over the course of 2020. Fortunately, things improved after Maruti Suzuki India resumed production at its Manesar and Gurugram plants from May 12 and 18, respectively. This was followed by Suzuki Motor Gujarat plant kicking in on May 25.
Opening showrooms
Recovery speed will depend on how lockdowns fare in cities
However, the resumption of production is only one part of the equation. Actual sales also depend on relaxation of lockdowns across cities where majority of showrooms are located. Maruti Suzuki India says it has been re-opening showrooms on a gradual basis across several cities as per the guidelines stipulated by local authorities. It hopes to open more showrooms as containment zones shrink further.
Still optimistic
M&M also records a 56 percent drop in MoM sales
Meanwhile, Mahindra & Mahindra's passenger vehicle business recorded a 56 percent drop in sales compared to last month. The company also generates sizeable revenues from its farm equipment business. That recorded a 12.13 percent fall in May compared to the previous month. The company seems optimistic due to decline in cases and easing of lockdowns combined with a good monsoon and steady food prices.
Minor decline
Interestingly, exports aren't hit as hard as domestic sales
Neither Tata Motors nor Bajaj Auto were spared. The former recorded a drop of 40 percent in its passenger vehicle sales, whereas the latter also saw a 30 percent decline. Interestingly, the impact on exports was relatively lower for both Tata and Bajaj. The two-wheeler maker saw a 4.7 percent decline in total exports, with Tata recording a drop of eight percent.
Show goes on
Meanwhile, 21 new cars expected to hit showrooms in June
As the economy limps back to normalcy, carmakers in India are planning on introducing new models. Maruti will be launching the second-generation Celerio based on the lightweight HEARTECT platform with two engine choices. A total of 21 new cars are expected to be launched from manufacturers ranging from Tata and Honda to BMW and Aston Martin in the month of June.