How the Coronavirus is Pushing Car Sales to the Down-lane

Coronavirus has been making headlines all around the world due to its aggressive transmission rate and deadly symptoms. Many European countries have now fallen prey to the virus which has claimed over 2500 lives all around the world. Several countries around the world have imposed strict travel bans and economic sanctions in order to stop the spread of the deadly virus. With such a large global epidemic hitting the world, there were bound to be severe economic repercussions. So, how has the Coronavirus hit the Indian economy? Well, it certainly had an impact on our automotive sector. Here’s a look at how the Coronavirus has pushed car sales into a down-lane.

Car Sales in February

Rate of care sales has dipped again in February, and car manufacturers and makers across the country are now scared with respect to what further impact the virus will have on their sales. Most manufacturers are now trying to sell their left-over stock as production facilities in several countries in Europe have been shut. The government had recently released a statement that said that India would be transitioning to a new emission standard.

Therefore, car sales of models that comply with earlier standards will fall to an all-time low once the implementation starts. This sudden transition had already strained the automotive industry as buyers were still not confident in buying new cars. Therefore, most dealers were trying to get rid of their old stock as purchases for these obsolete models would be close to zero once the transition takes effect. The government had earlier said that the deadline to make the transition from BS-IV to BS-VI is April 1^st. However, the Coronavirus scare has shut off several production facilities in mainland China, which has, in turn, affected the supply chains for automotive parts.

A slowdown in Car Sales and Manufacturing

The Director of Sales at MG Motors, Rakesh Sidana had said that the Coronavirus scare has severely limited their production capacities as many centers in Europe and China have been shut. He believes that this is directly responsible for the reduction in sales in February, and predicts that the downfall will continue throughout March. MG Motors had one of their lowest retail sales in February, with the final amount coming to a mere 1,376 units last month.

Similarly, Maruti Suzuki underwent a 1.11 % decline in sales, with total sales coming up to just 147,110 units, which is much lesser than their sale of 148,682 units last year. Furthermore, Mahindra & Mahindra suffered a 58 % decline in sales last month, owing to the automotive giant lowering production due to the emission standards transfer. Also, a shortage of parts and low exports from China led to them selling only 32,476 units last month, which is significantly lesser than the 56,005 units they sold last year.

Uncertain Future

While most of these companies had predicted a drop in sales due to the emission transfer protocol, the unexpected arrival of the Coronavirus has severely affected the industry. This unforeseeable challenge has put many restrictions on the supply of parts from China, affecting the capacity of Indian makers to adhere to the BS-VI specification. Tata Motors too suffered a 34 % decline in sales, having sold only 38,002 units in February, while they sold 57,221 units last year. The company was also badly affected by a fire that broke out in one of their vendor’s storehouses, which in turn, affected their production rate and volume. Similarly, Hyundai went down by 10.3 % with sales amounting to only 48,910 units in February.

Most of these manufacturers are hoping that issues will be cleared up by late March, and that supply chains will be re-instated as quickly as possible. To make this possible, large dealers such as Honda are trying to ramp up production of BS-6 models, in a bid to reduce the waiting period for customers. Adding further trouble to the struggling automotive industry is the lagging economy that is undergoing a slowdown, putting the entire industry under pressure. With mismatched inventories, shortage of parts, compromised production facilities and a slowing economy, it really does look like the automotive industry has its work cut out for itself in the months to come. Let us hope that the Coronavirus and its effect recedes in the months to come, providing much-needed relief to our automotive sector.