Following the news that car sales in India declined by nearly 85% year-on-year in May 2020;

Animesh Kumar, Director of Automotive Consulting at GlobalData, a leading research and consulting company, offers his view:

“After April, which marked the darkest hour in the India automotive industry with record ‘zero’ sales, May witnessed slight resumption of both supply as well as demand. It was driven by the relaxation of lockdown norms in some regions from the second week of May. Passenger car OEMs cautiously reopened their dealerships and resumed production activities. However, working at a short capacity and supply chain disruptions continued to mar the automakers. While dealerships are now moving towards normalcy in terms of number of operational dealerships, footfalls and vehicle enquiries continue to remain lower than the pre-COVID levels.

“All OEMs encountered substantial decline in sales compared to May 2019. Maruti Suzuki sold 13,702 units i.e., 89% decline compared to May 2019. Hyundai witnessed 84% decline and Mahindra and Mahindra (M&M) suffered 81% decline.

“Though the volumes in May 2020 are significantly lower compared to May 2019 and they show that the market is far away from recovery, May sales should be considered as a positive development – especially after the disastrous April 2020. Several purchase decisions are pending since end of March and given the COVID-19 situation does not worsen significantly, coming months should witness increase in sales.

“Worsening of the COVID-19 situation and economic environment can negatively impact the performance in coming months. Consumer sentiments, which are linked to both COVID-19 and economy, can cause postponement or cancellation of purchase decisions. However, the need for personal mobility, due to concerns regarding safety and hygiene, can push the demand for new and used cars as well as two-wheelers. GlobalData estimates that sales in June 2020 would indeed be lower than June 2019 but the rate of decline would improve compared to May 2020.

“Lockdown is coming to an end and most establishments would now be operational. Moreover, sales volumes are expected to improve due to demand-pull generated by OEMs through discounts and attractive finance schemes, such as ‘Buy Now Pay Later’ scheme by Maruti Suzuki.

“Online car sales would also contribute in increasing the sales. OEMs including Maruti Suzuki, Mahindra and Mahindra (M&M) and Tata Motors offering explored digital sales, which is a positive development and right step towards the future. As per Hyundai Motor India, over 700,000 visitors have visited its online car buying platform – ‘Click to Buy’ since its launch. The platform was piloted in NCR region in January 2020 and was later expanded to the entire country in April 2020. The platform has received around 1,700 bookings so far and out of that 54% were for the new Hyundai Creta. These are healthy developments and show that Indian customers are not averse to online purchase of vehicles.”