Auto sales in India plummeted in May 2021: FADA

Auto sales in India plummeted in May 2021: FADA

Auto sales in India plummeted in May 2021: FADA&nbsp | &nbspPhoto Credit:&nbspRepresentative Image

The Indian automobile industry has been battling a sales slowdown since late 2018. The industry witnessed sales decline in 2019 on the account of impending BS6 emission norms while the pandemic in 2020 further worsened the situation as vehicle sales plummeted. And even though 2021 showed strong signs of recovery, the second wave of COVID-19 threw spanner in the works. Due to an alarming rise in the number of new cases, several state governments in the country imposed lockdowns in May 2021. This kept customers away from dealerships and new vehicle sales declined substantially. According to the Federation of Automobile Dealers Associations (FADA), new vehicle sales in India last month declined by 54.79 per cent. Automobile dealerships sold 5,35,855 vehicles last month as opposed to 11,85,374 units in April 2021. 

As per statistics shared by FADA, four-wheeler sales in India decreased by 58.96 per cent; from 2,08,883 units in April 2021 to 85,733 units last month. The two-wheeler sales too witnessed a steep drop of 52.52 per cent as automakers sold 4,10,757 units of two-wheelers last month as compared to 8,65,134 units in April 2021. As a matter of fact, all the vehicle categories in India, including tractors, registered a sales decline last month as compared to April this year. 

FADA noted that the first nine days of June 2021 have seen a robust sales because of pent-up demand. However, the recovery this time will not be as rapid as it was after COVID-19’s first wave in the country. This is because the second wave has taken a toll on the rural sector in the country that had controbuted significantly to auto industry’s revival last year. And since the sales slowdown has badly impact auto dealers, FADA has urged PM that instead of restructuring loans, banks should allow a moratorium of 90 days to all categories of dealers without keeping a turnover limit.

Vinkesh Gulati, President, FADA, said, “Since the current lockdown has already lasted well over 30-45 days and is still continuing in South India, revenue for most of the Dealers are negligible as there was minimal sales. Due to this, dealers will not be able to repay their loan tranche payment which is getting due. This will ultimately lead towards default. Since there are no guidelines, extension of tranche is considered as restructuring of loan. This will ultimately have a negative impact on Dealers credit score as their CIBIL rating will get impacted.”

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