For India's automobile industry, bad news has been piling up one after the other. With BS-VI implementation less than a month away, sales continued to fall last month. And there's no silver lining on the horizon, yet.
While overall vehicle sales continued to fall—the drop in February year-on-year was 18 per cent—more worrisome has been the crash in sales of commercial vehicles. A key indicator of economic activity and whether it is picking up, this category has crashed by a huge 33 per cent, to just above 58,000 units last month. Double jeopardy is that this fall is based on the already low year-on-year percentage of last February, when the economy slowdown had already started seriously affecting the market.
While the auto industry performance has been in free fall for the last one-and-a-half years due to the economic sentiment, now there are two new factors that have popped up as a new debilitating impediment. One is the effect of the coronavirus pandemic, and the subsequent disruption of supply chain from China. The other is the impending new emission norms, BS-VI, set to come into effect from April 1. Most automakers have gone slow on production, focusing on clearing up their old BS-IV inventories, which cannot be made or sold after the April 1 deadline—overall production has gone down by 13 per cent. "Some upside on the registration numbers of Vahan can be attributed to last minute purchases by customers trying to advance purchase of BS-IV vehicles," said Rajan Wadhera, president of the Society of Indian Automobile Manufacturers (SIAM), while unveiling the figures.
Passenger car and van sales fell by 7 per cent, bikes and scooters were down by almost 20 per cent, while three-wheelers fell by 31 per cent. And things are only looking gloomy going forward—the industry is already bracing for a drop in sales once BS-VI comes into effect next month, with prices for the new models set to be higher. Adding to the woe will be dearth of raw materials not coming from China due to the coronavirus scare. This despite the government issuing a force majeure notification and issuing orders that all shipments from abroad be cleared by customs round-the-clock.
