Days after Maruti Suzuki reported zero monthly domestic sales for the first time in its history for the month of April, other auto manufacturers HMSI and TVS motors have also met with the same fate. The lockdown has badly affected the already struggling auto sector and there is less hope that it would on a path of recovery even after the Covid-19 pandemic is over.
The auto industry has been going through its worst phase in India. Since 2016 multiple factors including demonetisation, the introduction of Goods and Services Taxes (GST), hike in mandatory insurance, slowdown in the Indian economy has badly impacted the sales of the auto vehicles. The latest headache of the automakers is the huge stocks of BS-IV vehicles at the dealerships that have become a new headache as the country has been witnessing three-phase of lockdown.
As per the governments' direction, the registration and sale of any BS-IV vehicle will not take place on April 1 onwards. The dealerships are witnessing a huge inventory of vehicles lay unsold due to the prolonged lockdown. Even the Supreme Court has allowed only a 10-day extension for the sale of BS-IV vehicles once the lockdown is lifted.
Loss of jobs will have a direct implication on auto sales
The auto industry is staring at a loss of Rs. 21,000 crore due to COVID-19 pandemic and job losses especially in the organized sector will have a direct implication on auto sales, especially two-wheelers. Job losses would affect customers' purchasing power. Further, the new BS-VI regime will increase the cost of automobiles by 10-20 percent which will be detrimental to sales in a price-sensitive market like India.
Moreover, the unsold stocks of BS-IV will be exported to the countries where its sales are allowed. The entire cost will have to be taken care of by the companies themselves. All the players have suspended their manufacturing since the last week of March as per the direction given by the government.
