Car Sales Likely To Bounce Back Strongly After Lockdown Lifts

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While the Coronavirus has spelled havoc on the car sales in the country, it’s highly possible that the entire market will strongly bounce back as soon as the lockdown is lifted

The Indian auto sector seems to be going through its worst phase ever. The manufacturers have seen a huge drop in sales in March due to a combined effect of the slowdown and the spread of Coronavirus pandemic. What made it even worse is the 21-day lockdown that has brought many businesses to a standstill. With the lockdown set to increase beyond its original deadline, it looks like the carmakers will continue to suffer for a while more.

All carmakers, including major players like Maruti Suzuki, Mahindra & Mahindra, Toyota Motor Corp and Hyundai Motor India Ltd have suspended production to safeguard its workforce and prevent the virus from spreading. The effect of the suspension of production has had a direct impact on monthly sales. Maruti Suzuki, which is the largest carmaker in the country, sold 83,792 cars in March, thereby clocking a dip of a 47%.

On the other hand, Mahindra and Mahindra, the UV expert, has seen a dip of 88% in its sales. This huge drop can be also attributed to the company ceasing production ahead of the BSVI deadline as most of its popular models, like the XUV500 and Scorpio, continued with a BSIV engine right through March 2020. Tata Motors, on the other hand, witnessed a fall of 68% in the demand for its passenger vehicles, while its commercial vehicle business slipped by 87%.

Even Toyota Kirloskar Motor, the local subsidiary of the Japanese auto giant, saw a 59% fall with just 8,022 vehicles sold in March 2020. Hyundai Motor India Ltd sold 32,279 vehicles last month, which led to a 47% drop. Basically, the auto industry was already in pressure due to low demand ahead of the switch to BSVI emission norms. The outbreak of Coronavirus made the situation even worse.

However, all is not lost for the Indian car market. There are high chances that the sales performance would see a major increase as soon as the lockdown is lifted and the scare caused by Coronavirus is reduced. Many car buyers those would have booked their car around Navratri will finally take delivery of their vehicles, while those who had postponed their car buying decision until the advent of BSVI norms would also finally invest in a vehicle.

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The slew of vehicle launches that have happened in recent times will further work in favour of the market. Recently, the second generation of Hyundai Creta, a popular SUV, was launched in the country. Maruti Vitara Brezza also got petrol engine for the first time with facelift recently.

India’s best selling compact sedan ‘Maruti Dzire’ too got a facelift and a new petrol engine and deliveries to begin soon after the lockdown is lifted. On the other hand, the Verna, another popular product, has just got a facelift. Soon, even the next-gen Honda City, New Skoda Karoq, VW T-Roc and S-cross Petrol will be launched in the country, which should further help its carmaker attract more buyers.

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Another factor working in favour of the market will be the fact that the fast-growing trend for social distancing will lead people to start ditching public transport in favour of private vehicles. Not just this, even those who had to postpone buying a new car due to the lockdown will finally flock to dealerships to make the purchase.

While it’s true that some business which have incurred heavy loses due to lockdown might cut the salary of employees which may lead to further postpone buying a new vehicle, sales of last mile delivery vehicles like the Maruti Eeco could be boosted with more people preferring to shop online instead of going to a marketplace and putting himself to risk of infection.