Factory closures and closures hit wholesale auto sales

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The combined impact of lockdowns in states due to the increase in Covid-19 cases and the temporary shutdown of their factories by many OEMs has negatively impacted wholesale shipments.

Wholesale shipments from automaker factory doors in May fell sharply across all categories as many states were stranded for most of the month. While the restrictions impacted overall sales, original equipment manufacturers also halted operations at manufacturing plants for annual maintenance and due to worker unrest over safety concerns. Covid-19.

Passenger vehicle shipments fell 61.2% in May 2021 from May 2019, two-wheelers were down 79.6% and three-wheelers 97.6%, according to monthly data released on Friday. by the Society of Indian Automobile Manufacturers (Siam).

Since May 2021 and May 2020 were abnormal months for the auto industry due to the pandemic, a comparison with May 2019, a normal year, presents a more realistic picture.

The total production of passenger vehicles, two-wheelers and three-wheelers in May 2021 was 8 06,755 units compared to 24,17,597 units in May 2019, a decrease of 66.63%.

Retail sales figures for May announced by the Federation of Automobile Dealers Associations (Fada) on Thursday also showed a similar trend, with overall sales falling by 71%.

Industry analysts had predicted a double-digit decline in all segments. In May, much of the country was stranded and investigations were significantly below normal. Wholesale sales are expected to decline month over month due to the impact of localized blockages and supply issues, including the availability of industrial oxygen, analysts said.

Nomura said in a research note that wholesale shipments between segments remained significantly lower as Covid-related lockdowns impacted demand. Given the disruption, Nomura said he would avoid drawing conclusions from the May volumes. However, the pace of the recovery will be important to follow from June / July.

Naveen Soni, Senior Vice President of Toyota Kirloskar Motor, said: “Last month we saw no production at our factories in Bidadi as well as minimal sales due to much-needed restrictions and sporadic blockages in different parts of the world. country. Therefore, comparing last month’s performance to May 2020 would be very skewed, as May 2020 had witnessed a gradual restart in operations and sales. Even more so for TKM, because even before the restrictions were announced in Karnataka, we were well into our planned annual maintenance shutdown, thus increasing the number of non-production days. “

Jefferies said the spread of Covid-19 and lockdowns had a huge impact on Indian auto volumes in May, and web activity indicates interest in PV has bottomed out above lows of 2020 and bends again. This, added to the sharp drop in new cases of Covid-19, suggests that a recovery in demand is imminent.

Rakesh Sidana, Sales Manager, MG Motor India, said: “In these times, our efforts continue to be aimed at ensuring the safety of people and maximizing service to the community. The continued lockdown in some states in June indicates that parts shortages will continue to hamper overall production next month. Based on the trend of bookings, we expect an upward trend in June. “

Motilal Oswal said a majority of OEMs brought their maintenance shutdowns forward into April-May 2021 to merge it with the lockdown. He said his interactions with the industry’s major distribution partners reflect optimism for a recovery once the lockdown is lifted.

Yadvinder Singh Guleria, Director of Sales and Marketing, Honda Motorcycle & Scooter India, said: “May 21 saw a further slowdown in sales momentum, with almost 80% of the network not operational in due to local blockages. The situation on earth is very dynamic with weekly announcements of confinement extensions. We are monitoring the situation closely and with some loosening of economic activities visible in all cities in accordance with the new guidelines, we are optimistic about the gradual resumption of our concession operations taking care of the safety and convenience of customers. “

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