India’s Coronavirus Lockdown Worsens Auto Sector’s Pain In March, Analysts Say

Factory-gate shipments of passenger cars, two-wheelers and commercial vehicles are likely to tumble in the range of 29-71 percent year-on-year in March, data compiled from the reports of four brokerages—Nomura, Emkay Global, Motilal Oswal and Nirmal Bang—showed.

India’s automakers are facing a double whammy. First, an increased upfront insurance cost, coupled with a broader consumption slowdown in the economy, led to a worst slump in sales in decades.

While deep discounts helped cushion sales a bit during the festival season and in December, both retail sales, measured by registrations, and wholesales tumbled in January and February due to disruption caused by BS-VI emission norms. And now a nationwide lockdown to combat the Covid-19 pandemic has stalled operations at companies and dealerships.

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The Indian government announced a complete lockdown from March 25, but some states, such as Maharashtra and Kerala, had sealed borders earlier. So, there has been a significant drop in enquiries and customer walk-ins while counter sales plunged 60-70 percent during the period, Ashish Kale, president of Federation of Automobile Dealers Associations of India.

According to the analysts, demand was largely flattish even before the lockdown, with only demand for two-wheelers being slightly better on account of the discounts offered ahead of the March 31 deadline to liquidate all BS-IV inventory.

The demand, they said, is expected to remain under pressure in the near term due to a possibility of an extended lockdown as Covid-19 cases continue to rise.