According to the report published by India Ratings and Research (Ind-Ra) on India’s auto sector in May, the sales and production of automobiles have been impacted during the second wave of Covid-19. The report was published in the credit news digest edition highlighting the trends in the sub-segments of the auto sector which includes commercial vehicles, passenger vehicles, two or three-wheelers. The focus of the report was on the market share movement, sales volume growth, change in commodity prices, and recent rating actions.
As per Ind-Ra, due to the impact of the second Covid wave in May 2021, the sales have been greatly affected. Due to the amid state-wise lockdown related restrictions, the PV and 2W equipment manufacturers have declared shutdowns of the maintenance factories and also plant shutdowns for 10 to 14 days. The automobile dealers had either limited or closed their operations. In some states, the lockdown lasted for more than a month, due to which the sales were again adversely affected. According to the report, the domestic automobile industry’s sales volume has declined by 65% in May 2021. The PV and 2W sales declined by 66% in the same period while 3Ws demand declined by 91%.
Ind-Ra is expecting an increase in the sales volume in June 2021 as the manufacturing activities in OEM plants have now resumed.
As the production levels of PVs and 2Ws declined, the total production also declined by 57%. Also, the steep decline in domestic demand was somewhat compensated by the stable export demand. The retail sales also declined with PV and 2W volumes declining 59% and 52% respectively. This further affected the sentiments of the consumers and also led to the closing or limiting of operations by the majority of dealerships.
As there were limited sales in May, Inventory at the dealership levels for PVs also increased. According to the Ind-Ra report, the sales for June will witness a healthy growth as compared to than in May.
Source – Indian Ratings and Research
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