MUMBAI: Demand is returning to the auto sector, though slowly, if the May sales are an indication. Although vehicle sales in May were a fraction of what the sector reported in the year-ago period, they were better than the near zero numbers reported in April.
Several leading automakers resumed operations by end of April, but with as little as 20% capacity utilisation due to supply side constraints and a slump in demand.
India’s largest carmaker, Maruti Suzuki India Limited (MSIL), reported sales of 18,539 units in May, having resumed production in a phased manner at two of its units last month after some easing of the lockdown curbs.
The carmaker which had sold 1,34,641 units in May last year said it resumed operations at its Manesar plant from 12 May and Gurugram facility from 18 May. Since the restart of operations, Maruti has been utilising around 20% of its installed capacity as safety measures adopted at the plant have made the manufacturing process cumbersome. The company plans to gradually increase production in the next six months.
Hyundai Motor India Ltd (HMIL), country’s second largest carmaker, reported domestic wholesales of 6,883 units for May compared with 42,502 units during the year-ago period. The Korean carmaker’s exports stood at 5,700 units for the last month, taking the May tally to 12,583 units.
Hyundai said that it received close to 15,000 customer bookings across models in May and 11,000 new cars were delivered to customers during the month. “This performance was made possible on account of strong customer interest and demand pull generated by trendsetter brands like the Creta, Verna, Venue, Elite i20 and Grand i10 Nios," said Tarun Garg, executive director, sales, marketing and service, Hyundai Motor India.
Mahindra & Mahindra Ltd. (M&M) reported a 79% decline in its domestic vehicle sales in May to 9,076 units as it partially resumed operations across its production units as well as its dealership network last month. While it sold 3,867 passenger vehicles last month, down 81% year-on-year, the company sold 5,170 commercial vehicles or CVs, down 71%. Exports were 484 vehicles, down 80%.
"We are seeing initial traction for our small commercial vehicles and SUV brands such as the Bolero and Scorpio. As new lockdown norms are being announced we are hopeful of demand gaining traction in the coming months," said Veejay Nakra, chief executive officer, automotive division, M&M.
“Since staggered lockdown was the only way India can minimize the loss of human capital, it is sure we have still more months to go even before we get to the new normal," said Puneet Gupta, associate director at IHS Markit, a market research firm.
The challenges in India are acute when it comes to opening up the economy. Migratory population and cash flow issues will keep the industry in sleep mode for a few more weeks to come, Gupta added.
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