It is going from bad to worse for India’s automobile industry. Companies which were already driving down a bumpy road—facing lower demand and changing regulations—are now seeing their wholesales crash by 50-90 per cent in March.
With BS-VI emission norms coming into effect from April 1, 2020, most automakers were expected to limit production in March as they prepared for the switchover to the new emission norms. The 21-day lockdown announced to contain the spread of COVID-19 pandemic added to their woes.
The lockdown forced people to stay and work from home and companies to suspend production at factories. Some states had imposed a partial lockdown days before March 21. Barring stores selling essential products, much of the markets across cities and villages are shut. So, while auto dealers are closed, delivery of vehicles from factories to dealers and onwards to retailers is hit too.
Maruti Suzuki, the country’s largest car maker, said on Wednesday that its total sales in March tumbled 47 per cent year-on-year to 83,792 units, compared with 158,076 units it sold a year ago. For the full year ending March 31, 2020, Maruti’s sales were down 16 per cent to 15.63 lakh units from 18.62 lakh units in the previous year.
Its closest rival Hyundai Motor sold 32,279 units, last month, which included 26,300 units it sold in the domestic market and exported 5,979 units. That’s also 47 per cent year lower than the 61,150 units it sold in total in March 2019.
For the Mumbai-based Mahindra & Mahindra, March proved to be even more challenging than its Delhi-based rivals. Total sales for the utility vehicle maker plunged 88 per cent last month to 7,401 units from 62,952 units. While its passenger vehicle sales were down 88 per cent to 3,384 units in March, commercial vehicle sales slumped 90 per cent to 2,325 units.
In the farm equipment business, the company’s total sales declined 31 per cent to 13,613 units, versus 19,688 units it sold in March last year.
“Our performance in March has been muted on account of the impact of the current lockdown related to COVID-19 and the disruption in our BS-VI ramp up plan. The latter was planned between February and March, but was affected due to the challenges of parts supply from global and local suppliers,” said Veejay Ram Nakra, CEO, Automotive Division at M&M.
Toyota Kirloskar Motor said it had already liquidated its BS-IV stocks and sold 7,023 BS-VI vehicles to its dealers in March. In total it clocked sales of 8,022 units last month, including the last batch of 999 Etios destined for export markets. In the same period last year, Toyota had sold a total of 13,662 units.
South Korean car giant Kia also saw sales of the much loved Seltos SUV drop 47 per cent month-on-month to 7,466 units in March, apart from 1,117 units of the newly launched Carnival luxury MPV. MG Motor sold 1,518 units in March, versus 1,376 units in February. The company’s sales in February had been impacted as COVID-19 outbreak disrupted supply chains in China and Europe.
For Tata Motors, the passenger vehicle sales declined 68 per cent from a year ago to 5,676 units from 17,810 units, last March.
Commercial vehicle makers saw bigger slump in sales. Tata Motors’ CV sales were down 87 per cent to 7,123 units from 56,536 units.
Girish Wagh, president of CV business at Tata Motors said domestic sales were “deeply impacted” by the COVID-19 lockdown as well as the planned transmission to BS-VI emission norms.
Ashok Leyland last month sold just 2,179 trucks and buses, compared with 21,535 units it had sold last year, which is a 90 per cent decline.
Sales at Eicher Motor’s unit VE Commercial Vehicles also plunged 83 per cent in March to 1,499 units, from 8,676 units.
The industry is facing multiple headwinds at a crucial time of transition to the BS-VI emission norms. Well before India had announced a lockdown, Chinese factories were shut due to the COVID-19 outbreak there. Indian auto companies import lot of components such as engine parts, lighting systems, steering and braking systems. A chunk of the imports are from Chinese companies. These supplies suffered as factories in China were closed, in turn impacting production, particularly of vehicles compliant to new emission norms. Now, even as Chinese companies are opening up, the lockdown is hurting retail sales for Indian auto makers, which will further pressure their earnings, warn analysts.
“With the already existing slowdown during FY20, the industry is likely to suffer huge losses going forward. Even if the pandemic is curtailed, the consumer sentiments are expected to be unfavourable and demand is expected to remain muted during first half of FY21, led by fluctuating and uncertain economic conditions,” said Darshini Kansara, research analyst at CARE Ratings.
