Retail sale of automobiles crashed by over 70 per cent in May 2021 to 535,855 units over May 2019 as the second wave of the pandemic and local lockdowns in most parts of the country took a toll on the industry. However, with cases declining and economic activity resuming this month, initial signs in June show promising signs with industry body FADA saying sales may hit the same levels of last June if the trend continues.
While sales are generally compared with the same month in the previous year (year on year), FADA has compared this year's May sales tally with those of 2019 as the national lockdown of last year meant sales were extraordinarily low. All categories including tractors registered a steep decline last month.
Passenger vehicle sales saw a 63.7 per cent drop at 85,733 unit sales while two wheelers registered a 71 per cent decline at 410,757 units. Similarly, commercial vehicles were down 77 per cent at 17,534 units, three wheelers by 90 per cent at 5215 units and tractors by 58 per cent at 16,616 units. Overall industry shrunk to just 535,855 units.
"The 2nd wave of COVID-19 has left the entire country devastated as there may not be a single household which did not get affected. Apart from urban markets, this time, even rural areas were badly hit. May saw continued lockdown in most of the states," said Vinkesh Gulati, President, FADA.
Like the second wave of the pandemic however, the worst may be over for the industry. FADA said the first 9 days of June were encouraging and if the trend continues, sales will reach the same levels of June 2020.
"The 1st nine days of June has seen better than expected retails due to pent up demand which was there in the system when states started implementing lockdown. If the trend continues, we may see almost similar sales when compared to June'20 last year," Gulati said.
"The monsoons arrived in India almost on time. If Met predictions are to be believed, normal and evenly spread rains may bring an early respite for the rural economy thus pushing demand for vehicles faster than expected," he added.
Post the national lockdown last year, the industry benefitted from pent up demand posting a better than expected recovery. This year however, FADA believes the recovery may take longer as the spread of the disease this time was more expansive impacting vast swathes of rural India as well.
"It may be prudent to say that India may not witness a V-shaped recovery unlike last time. FADA hence continues to remain guarded in its optimism on overall industry recovery for the fiscal FY21-22," Gulati said.
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