In the Indian car market, the smaller you are, the better your sales. Last month has been much better for the auto sector
The past quarter has been traumatic for the Indian car and bike industry. However, after April, when companies registered zero sales, things have improved much. On the whole, for most automobile manufacturers, sales in June were around half of what they were last year, same month. While we must remember that 2019, too, had seen a decline in automobile sales, the one positive this year has been that firms have been able to recover. Sales for almost every manufacturer doubled from May to June as unlocking began. In the two-wheeler market, the largest manufacturer, Hero Motocorp, sold 450,744 units in the past month, almost three-quarters of the number it sold in June. Bajaj Auto, too, saw an increase in sales, although the manufacturer had a tough time controlling the unfortunate spread of the Chinese virus at its Waluj plant. This came just a few weeks after its boss, Rajiv Bajaj, attacked the Government for the lockdown. Most manufacturers, dealers and workshops across the country are mostly open now, other than those inside a containment zone. Yet, there are some interesting trends that are emerging from last month’s sales. The first is that rural demand has contributed much towards a sharp recovery. This is evident due to the fact that Mahindra Tractors, the largest player in the agricultural vehicle market, has seen a rapid climb in its sales figures. This is indicative of a positive monsoon so far. Similarly, for two-wheeler companies, there is a seeming rural bias, evident in greater sales of commuter motorcycles and a decline in urban-focussed scooters and 150cc plus motorcycles. For cars as well as firms such as Maruti, Hyundai and Tata, who have a larger small car portfolio, are seeing sales pick up. Larger and higher specification vehicles are seeing a commensurate decline in their aggregate demand. However, manufacturers were quick to warn against picking up too many future trends based on last months’ sales as the process of unlocking continues with a bit of confusion still reigning in major cities, such as Chennai and Mumbai, the former being a major automobile production hub.
At the same time, manufacturing remains impacted. Large-scale manufacturers have not been able to move to three-shift operations and smaller suppliers are dealing with not only a smaller labour pool but also the current Sino-India brouhaha. Several intermediate components, as well as manufacturing tools and dyes, come from across the border. Manufacturing might not stabilise before 2021 and not every manufacturer, component supplier, transporter or dealer might be able to deal with the crisis that far. Some Government support will be of great help though.
(Courtesy: The Pioneer)