First signs of green shoots in auto sector

New Delhi: As country braces for “un-lockdown”, the Indian automobile is showing some signs of revival with increased demand. The sector witnessed some demand returning in May after zero sales in April, as partial operations resumed after two months of the nationwide lockdown. As per industry estimates, wholesale of passenger vehicles stood at about 37,000 units in May. Interestingly, this figure was about 2.39 lakh in May 2019. India’s biggest carmaker Maruti Suzuki sold more than 18,000 units in May. The company resumed manufacturing operations at its Manesar facility from 12 May and at its Gurugram facility from 18 May. Korean car manufacturer Hyundai Motor announced that it had sold more than 6,583 units in the domestic market in May and another 5,700 units had been exported in the same period.

Mahindra and Mahindra reported a decline of 79% in its total vehicle sales with 9,560 units sold in May. Toyota Kirloskar Motor said the company sold 1,639 units in May. In the two-wheeler segement, market leader Hero MotoCorp has dispatched 1.12 lakh units in May and its 5,000-plus customer touch points have been re-opened. The Indian automotive industry, this is to be noted, supports employment of more than 3.7 crore people and contributes to 15 % of GST, amounting to Rs 1.50 lakh crore every year. However, automobile manufacturers say that the “Aatma Nirbhar Bharat” economic package has left out the auto industry which is in need of an immediate stimulus to boost demand and stop job losses.

The Society of Indian Automobile Manufacturers (SIAM) said that the “Aatma Nirbhar Bharat” economic package has left out the auto industry. SIAM president Rajan Wadhera said in a statement: “The agri sector package may benefit the auto sector indirectly in the medium term, but the Indian automotive industry needed an immediate stimulus to boost demand, which has not happened.”

The umbrella auto industry body said it had several engagements with the government at various levels and was looking forward to some direct fiscal measures for the automobile industry from the Centre in the Rs 20 lakh crore stimulus package. According to Wadhera, “The sector was already facing an unprecedented challenge with 18% degrowth last year and as per an assessment made by SIAM on the impact of Covid-19 on demand for vehicles in the current financial year, the sector could have a decline between 22% and 35% in various industry segments, if the overall Indian GDP growth is at 0-1% for the financial year 2020-21.”