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Auto sales in reverse gear

Dealers want package to lift them

The 2nd wave of covid has not only unsettled urban but also the rural markets this time around, Federation of Auto Dealers’ Associations said.

MUMBAI, May 10 (the CONNECT) - With the automobile sales sliding down in the second COVID wave, dealers’ apex body has asked the government for a fresh package and loan moratoriums. Recovery hence looks to take a longer time when compared to recovery which came after 1st wave, it said.

Unlike last year’s nationwide lockdown, the various States have imposed the current restrictions on movements of people and vehicles which is probably why there has been no relief announcements either by the Centre or RBI and Auto OEMs, Federation of Auto Dealers’ Associations (FADA) president Vinkesh Gulati said.

“India is currently facing one of its toughest times with 2nd wave of covid creating a havoc in everyone’s life. This time, the spread is not only limited to urban markets but has also taken rural India in its grasp,” he said.

Auto Registrations for the month of April witnessed double digit fall to the tune of -28% MoM, as most of the Indian states started going under lockdown (partial as well as full) beginning April 5th onwards. The spread started with Maharashtra followed by Chhattisgarh, Delhi, Rajasthan and other Indian States following the suit.

Not surprisingly, all categories hence closed the month in red with 2W down by -28%, 3W by -43%, PV by -25%, Tractors by -45% and CV by -24% respectively on a MoM basis, Gulati said.

FADA requested Auto OEMs to handhold their dealers the way they did last year during the 1st phase of pandemic as situation is very grim in most of the states and dealer principals as well as their teams are fighting for their survival from Covid. The federation also asked OEMs to not burden dealers with high billings all the states where lockdown has been announced.

The just-concluded elections in states like West Bengal, Tamil Nadu, Kerala and Assam, movement of migrant workers back to states like Uttar Pradesh and Bihar can keep the curve rising.

Overall, FADA hence maintained absolute sluggishness for the month of May as most of the states have announced extension of lockdown till the end of the month.

The only ray of hope lies on Monsoon’s on time arrival which is likely to enter India through the southern coast around June 1. The country’s weather office has also said that India is expected to get average monsoon rains this year, thus raising expectations of higher farm output, which is central to the country's economy. This will also lead to rural markets recovering faster than urban. Also, categories like Tractors and 2-Wheelers will have a rub off effect in terms of recovery. FADA sees overall recovery from the lows of FY21 and to reach the highs of FY19 only by FY23, Gulati said.

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