Auto retail sales down by 88.87% in May

At the end of May, out of 26,500 outlets about 60 per cent showrooms and 80 per cent workshops were operational across the country.

Retail sales of passenger cars dropped by 86.97 per cent and two-wheelers sales dipped 88.80 per cent in May.

Overall auto retail sales dropped by 88.87 per cent, said a group representing vehicle dealers.

April saw zero retails owing to lockdown imposed to contain coronavirus.

Total auto sales dropped by 2,02,697 units in May 2020 from 18,21,650 units in May 2019.

Passenger vehicle sales dropped to 30,749 units from 2,35,933 units, a year ago, while two-wheeler sales dropped to 1,59,039 from 13,19,842, a year ago.

Commercial vehicles dropped by 96.63 per cent to 2,711 from 80,392 units and three-wheeler sales dropped by 96.34 per cent to 1,881 units from 51,430 units.

While lockdown was gradually relaxed beginning May, auto dealerships and workshops opened up for the first time after 40 days.

At the end of May, out of 26,500 outlets about 60 per cent showrooms and 80 per cent workshops were operational across the country.

May registrations are hence not indicative of the demand situation as the Lockdown still continued in many parts, said  Federation of Automobile Dealers Associations (FADA).

"With an assumption of no further lockdown and continued reopening measures, there will be substantial pick up in Auto Retails in comparison to May, but the overall outlook continues to be grim with projected sales to witness a de-growth upwards of 25 per cent YoY," said FADA President, Ashish Harsharaj Kale.

He said that he first 10 days of June witnessed extremely low demand despite most dealerships which are now open for business.

Weak consumer confidence especially in urban areas continues to haunt as customers stay away from concluding their purchase due to threat of community spread and return of complete lockdown persists.

"With 7.6 per cent of GDP, a workforce of several million and a multiplier effect for many supporting sectors, the Auto Industry can be the driving force in boosting consumer confidence and improving sentiment, if supported with short term stimulus to revive demand as a return to normalcy seems very difficult till the festive season," says Kale.

He added, mobility still being a necessity and not luxury in a growing country like India, demand stimulus along with credit support can bring Auto Sales back in the positive zone within 30-60 days and help shore up consumer confidence.

The overall outlook continues to be grim with projected sales to witness a de-growth upwards of 25 per cent YoY, says FADA.

Urban Demand will continue to face challenges ahead with COVID-19 uncertainty.

On the flip side, the government’s push for infrastructure spending and the recent positive measures announced for the agriculture sector will help support rural demand.

It will further strengthen with the normal spread of monsoon which will help Tier 2 and 3 Dealers face lesser de-growth compared to their urban colleagues.

Photograph: Reuters