Due to the lockdown during the second wave of Corona, Auto Retail saw losses for the month of May as sales declined by 55 percent on the basis of MoM.
Federation of Automobile Dealers Associations (FADA) has released the monthly new vehicle registration data for May 2021. The industry collectively registered 5,35,855 registrations last month, which is a decline of 55 per cent as compared to the month-on-month (MoM). In April 2021, 11,85,374 vehicles were registered. This is the result of the second wave of coronavirus, which has put most of the states in India under almost total lockdown, which has a huge impact on retail sales.
Now, doing year-on-year (YoY) comparison of May 2020 would not be ideal as India was facing a nationwide lockdown in the month of May last year. Nevertheless, let us tell you that in May 2020, the total new vehicle registers were 2,02,697. In May 2019, the industry registered 18,22,566 new vehicle registrations.
Commenting on the May 2021 performance, Vinkesh Gulati, President, FADA said, “The second wave of Covid has devastated the entire country as there cannot be a single house which is not affected. Apart from urban markets, this time people in rural areas were also badly affected. The ongoing lockdown can be seen in most of the states. Not surprisingly, auto retail saw losses for the month of May as sales on the basis of MoM declined by 55 per cent. Similarly, across all categories of vehicles, 53 per cent in two-wheelers, 76 per cent in 3-wheelers There has been a decline of 59 percent in PV, 57 percent in tractors and 66 percent in commercial vehicles, respectively.
Commenting on the current market situation Sridhar V, Partner, Grant Thornton Bharat LLP said, “The decline in vehicle registrations is mainly due to the negative impact of the lockdown and demand across India, this time both rural and urban. While some states are opening in a phasewise manner. In early June, a significant correction in the market or Q2 is expected mainly based on all markets opening during the early phases of July 2021. The industry will also face the challenge of shortage of input material as a lot is said in the context of semiconductors and rubber.”
FADA says that since the current lockdown has lasted for more than 30-45 days and is still continuing in South India, the revenue is negligible for most of the dealers as sales were minimal. Due to this the dealers will not be able to pay the installment of their loan which is outstanding.
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