Plant shutdowns break India Auto Inc’s momentum in April

The wheels of the Indian auto industry had finally started to turn over the past few months, especially during Q3 and Q4 of FY2021, but the relapse of the second Covid wave just as the new fiscal opened in April, has once again brought back gloomy pictures from last year.

The Society of Indian Automobile Manufacturers (SIAM) today announced the wholesales (factory-to-dealer despatches) numbers registered by OEMs across vehicle segments last month, barring the commercial vehicle segment which is again missing from the monthly sales list presumably due to its continued poor performance.

While there isn’t a possibility of a year-on-year comparison owing to the nationwide lockdown last year culminating into a zero-sales month in the history of the sector, we have compared the figures on a month-on-month (MoM) basis with that of March 2021.

Passenger vehicles: 261,633 / -10.07%
The passenger vehicle (PV) segment saw a total of 261,633 units getting despatched to dealers, registering a 10 percent cumulative MoM drop compared to 290,939 units of March 2021. Within the category, passenger cars comprised 141,194 units (March 2021: 156,985 / -10%), UVs sold 108,871 units (122,350 / -11%) and vans remained largely flat at 11,568 units (11,604 / -0.31%).

With state-wise lockdowns starting getting implemented in Maharashtra, Chhattisgarh and Delhi right from mid-April, signs were clear for carmakers like Maruti Suzuki, which although continued production for the entire month and only pressed the hibernation button on May 1. Toyota Kirloskar and MG Motor India, however, had announced shutting down their manufacturing units, starting April 16 and April 29, respectively.

Some carmakers, including the likes of Hyundai Motor India and Kia Motor India, which continue to produce and honour long waiting times on some of their extremely popular models like the Creta, Seltos and Sonet, however, tried to maximise deliveries in states that were still open for non-essential activities until earlier this month.

Despite all of this, the UV segment, which was marching ahead with a relentless momentum even in desperate times, has finally seen the impact of the second wave. The flat performance of vans, could, however, be attributed to the upsurge in demand for ambulances, which were criss-crossing most Indian cities and lanes over the last three weeks, as people cried for desperate help.

Three-wheelers: 13,728 / -57.01%
The reinstation of lockdowns doesn’t bring any good news for this category of vehicles, which are primarily modes of shared transportation. As a result, passenger-carrying three-wheelers declined by up to 57 percent last month with wholesales of only 9,248 units (March 2021: 21,614), and similarly the goods carriers registered a 57 percent MoM de-growth, selling just 4,480 units last month (10,316).

However, a part of the sales of goods-carrying three-wheelers would have been compensated in the form of uptick of electric three-wheelers, which are increasingly becoming the new norm for e-commerce delivery companies in urban cities, as the online business continues to consistently shoot up during the pandemic.

Two-wheelers: 1,270,458 / - 30.18%
Two-wheeler sales, which have been reeling under tremendous pressure owing to the nationwide closure of schools and colleges for more than 13 months now, continue to show no respite.

The SIAM data tells that cumulative two-wheeler despatches last month stood at only 1,270,458 units, registering a sharp 30 percent MoM fall (March 2021: 1,819,682). Scooter sales which primarily come from urban areas stood at 300,462 units (457,677 / -34.35%), while motorcycles that are the mainstream commuting tools in rural India sold 667,841 units (993,996 / -32.81%). At 25,977 units, mopedswere down a dramatic 42 percent on a month-on-month basis as well (March 2021: 44,688).

The inroads of the pandemic into the hinterland this time around, with election campaigns and religious gatherings driving the spread of the disease over the last one month, do not augur well for the recovery of the sector.

With state-by-state going into a sequential lockdown over the last couple of weeks, companies, starting with largest two-wheeler maker Hero MotoCorp had to announce a shutdown across all its five manufacturing sites on April 22. While the closure has been further extended to mid-May, arch rival Honda Motorcycle & Scooter India too went into a two-week maintenance mode starting May 1.

According to Vinkesh Gulati, President of the Federation of Automobile Dealers Associations (FADA), “Two-wheelers is one area where we are still cautious and not optimistic like in case of the PV segment that we will be able to recover fast enough.”

With lockdowns continuing well into the middle of May and key automobile manufacturing facilities shut until May 15 at least, expect this month to bring equally sad results for the automotive sector, which, albeit, is doing its bit to arrange for oxygen “and stand shoulder-to-shoulder with the government and local authorities to provide all essential and non-medical support in this difficult time,” said Rajesh Menon, director general, SIAM.