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Coronavirus impact: 24% drop expected in PV sales in FY21, says SIAM

These numbers are based on GDP growth in the country slowing down to less than 1 per cent in the fiscal. This decline would push industry volumes back by a decade to around 2.15 million units, a level last seen in FY11

twitter-logoSumant Banerji | April 10, 2020 | Updated 12:09 IST
Coronavirus impact: 24% drop expected in PV sales in FY21, says SIAM
CV and two-wheelers sales to see 32-35% and 27-30% slump

KEY HIGHLIGHTS:

  • PV sales to decline 20-24% if GDP growth falls below 1% in FY21
  • CV and two-wheelers sales to see 32-35% and 27-30% slump, respectively
  • Industry to go back by a decade with volumes of 2.15 million units -- last seen in FY11.
  • Industry to log double digit decline in sales for two financial years in a row -- first time ever
  • Impact on suppliers and dealers yet to be estimated, but likely to be even worse

Sale of passenger vehicles could decline by as much as 20-24 per cent in financial year 2020-21 in the worst case scenario as a result of the impact of a long drawn out recovery from the coronavirus pandemic in India, calculations made by industry body Society of Indian Automobile Manufacturers (SIAM) has revealed.

These numbers are based on GDP growth in the country slowing down to less than 1 per cent in the fiscal. This decline would push industry volumes back by a decade to around 2.15 million units, a level last seen in FY11. This would be the second straight fiscal that vehicle sales would have tumbled in double digits. In FY20, sales declined by over 17 per cent to around 2.77 million units.

SIAM simulated the number for two other scenarios projecting GDP growth at a more optimistic 4 and 3 per cent depending on the duration of the pandemic and its impact on the overall economy. In the most optimistic case of a 4 per cent GDP growth, vehicle sales would decline by 10-12 per cent while in case of a 3 per cent GDP growth, it would decline by 13-16 per cent.

At the start of the year in January 2020, without the shadow of the pandemic, SIAM had internally projected a 2-4 per cent growth for the industry in fiscal 2021. With the lockdown that has completely stalled industrial activity in the country, any growth this year is now a foregone conclusion.

"These are still hypothetical numbers, more like a theoretical exercise. But the chances of the situation being much better than what is being said is far less than they being much worse. We are at the dark end of the tunnel when we cannot even say whether we are at the bottom yet," said an industry executive.

The other segments of the $120 billion industry are likely to fare even worse. In case of a less than 1 per cent GDP growth, the decline in commercial vehicle sales is projected at 32-25 per cent, two-wheelers at 27-30 per cent and three-wheelers at 28 per cent. Overall industry volumes would decline by over 20 per cent.

In case of a 4 per cent GDP growth, the decline would be 17-20 per cent for commercial vehicles, 16-18 per cent for two-wheelers and 18 per cent for three-wheelers. Overall volume contraction would be 13 per cent.

Sale of automobiles in the country generally follows the overall trend of GDP growth but does deviate at times. The just concluded FY20 was an example of that. While GDP growth for the fiscal was estimated at 5 per cent, overall automobile industry declined by over 16 per cent.

Also read: India Coronavirus Live Updates: Country records 540 new COVID-19 cases, 17 deaths in 24 hours; tally at 5,095

Also Read: Infographic: The big PPEs shortage in battling coronavirus

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