Automobile sector starts regaining balance after being knocked out for 3 months straight

Honda, Hero, Mahindra & Mahindra witness impressive sales

automobile sector

India’s automobile sector is reviving at an unprecedented pace, which even industry stalwarts were not expecting only until last month. The COVID-19 pandemic and subsequent stringent nationwide lockdown which was in force from late-March to April caused history being made in the automobile sector, resulting in zero sales of vehicle units in April 2020. In May too, the trends were disheartening, to say the least. However, pent up demand over the past few months, strong cash flow among the rural areas and an aversion to using public transport have resulted in sales picking up in June 2020.

Rural and semi-urban India are leading India’s automobile sector revival, even as urban demand remains hairline. As a result, tractors and agricultural vehicles are seeing a rise in sale, while the sales of two-wheelers too, in June have been impressive for all the major players. Mahindra & Mahindra has reported a 10 per cent growth in total tractor sales, amounting to 36,544 units in June. The company sold 33,094 tractors in the same month of 2019. Domestic tractor sales grew 12 per cent to 35,844 units as compared to 31,879 units in June 2019. 

“We have sold 35,844 tractors in the domestic market during June 2020, a growth of 12% over last year. This is our second highest June sales ever, said Hemant Sikka, president-farm equipment sector at Mahindra and Mahindra. He added, “It is expected that this demand will continue to remain buoyant in the coming months.”

Meanwhile, Sonalika Tractors reported 47.8 per cent increase in total tractor sales at 15,200 units in June 2020. The company had sold 10,286 units in the same month last year. Domestic sales rose 55.1 per cent to 13,691 units, while exports rose by 3.4 per cent to 1,509 units. The agriculture sector, going by these figures, looks upbeat about India exiting the lockdown outside containment zones. Further, it is also debunking myths of what many thought would be a prolonged paralysis of both the agricultural economy, as well as the automobile sector. 

Two-wheeler sales too are providing a great momentum for the automobile sector to revive from what was considered a death-knell like nationwide lockdown of an industry already facing the brunt of a global economic slowdown. Total sales of Honda Motorcycles & Scooters India Pvt. Ltd. nearly quadrupled over the previous month to 210,879 units in June. The company had sold 54,820 units in May. Also, the company exported 8,042 units last month. Honda Cars India Pvt. Ltd, meanwhile, sold 1,398 units in June as compared to 10,314 units in the year-ago period. Exports stood at 142 units last month.

Hero MotoCorp has witnessed the highest sale of domestic two-wheelers among the major players in June, with wholesale deliveries made to dealerships of over 450,744 units. This is an increase of about four times over the 112,682 units that the company dispatched in May 2020. 

TVS’ Motor two-wheelers registered sales of 191,076 units in June this year as opposed to 283,461 units in June 2019Compared to May 2020, when it sold only 41,067 units, the company witnessed a tripling of sales in June.  “The company faced supply chain constraints in June, but it has undertaken various counter-measures, some of which have started yielding results in June itself. The company is expecting to overcome these in July,” a statement from the company read. 

Bajaj Auto’s domestic sales in June 2020 stood at 146,695 units against 199,340 units in June 2019. The number is nearly four times higher than sales figures seen in May 2020, which had stood at just 39,286 units. Meanwhile, total sales of Royal Enfield stood at 38,065 units in June. The company had sold 58,339 units in the year-ago period. 

Four-wheeler sales, on expected lines, did not see a massive jump last month, however, both Maruti Suzuki and Hyundai, which control over 70 per cent of the market share in India, registered 3.8 and close to 3 per cent spike respectively in sales in June, as compared to May 2020. “A big part of the recovery in demand is from people who want to avoid public transport and want to have their own vehicle,” said Shashank Srivastava, ED, sales and marketing, MSIL, while also adding that small cars are getting a lot of traction since people are looking to use private and affordable transport instead of risking their lives by hopping on to public transport facilities in a post-CoVID world. An article in The Indian Express said manufacturers are expecting the recovery trend to remain strong as the inquiries and booking are rising fast. “The inquiries and bookings have reached 80-85 per cent of pre-CoVID levels,” said Srivastava.

Essentially, if the ongoing momentum of reviving the economy is continued unhindered, the industry is all set to revive itself soon. While rural and semi-urban India are helping resuscitate the automobile sector as of now, with Unlock 2 kickstarting, the demand in urban areas can also be expected to rise. Behavioural changes within people seem to be pushing them to opt for private vehicles. 

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