By Amit Panday, Nabeel A Khan & Shruti Mishra
New Delhi: As Delhi has gone into a 6-day lockdown from Monday 10pm, the restrictions across the national capital region along with 5 other states including Maharashtra, Rajasthan, Madhya Pradesh, Uttar Pradesh (across 5 cities) and Chhattisgarh are together expected to disrupt almost one-third of the country’s passenger car market, several industry executives told ET Auto.
The lockdown restrictions are not only going to impact the production of vehicles and components across the manufacturing units located in the affected regions, the regulations will also impact the distribution, retail and after-sales operations in many other states, the executives said.
“The current lockdown in 6 states will obviously affect the industry sales activities for almost 30%. If it continues it will damage market sentiments. This can have a disproportionate and adverse impact on sales, especially on retails,” Shashank Srivastava, executive director, Maruti Suzuki India Ltd, told ET Auto.
According to a Pune-based auto parts supplier, production is hit as only a few people are working on the shop floor. As part of a mandate from the state government, the shuttered showrooms would mean no sales and increasing fixed costs.
“It looks like this April also will be a washout like last year. Manufacturers are trying hard to maintain production levels but clearly they are hit. If retail stores are shut with no sales and if this continues for long just like last year, the production units will be forced to cut volumes,” a senior executive at a critical engine part supplier said, requesting anonymity.
The lockdown measures immediately after the harvest season would crush the buyer sentiments. After the local lockdowns we will see again a spike in job losses and pay cuts coupled with negative sentiments.Nikunj Sanghi, founder, JS Fourwheel Motors Pvt Ltd
Meanwhile, Amit Garg, promoter of the Delhi NCR-based Shiva Motors, a leading dealership of Jaguar Land Rover, Mahindra and Mahindra Ltd (M&M) and Bajaj Auto Ltd, said, “The Delhi showrooms and workshops are closed from Tuesday. The showroom footfalls in the NCR had dropped suddenly. Imposing lockdown is not the solution. Providing proper medical facilities and adhering to COVID-19 guidelines such as social distancing is the way forward.”“Lockdown will weaken the economy and the auto sector, which is yet to recover to normalcy,” he added.
According to a poll conducted by the Confederation of Indian Industry (CII), 75% of the 710 chief executive officers (CEO) across different industries who participated expect that partial lockdown measures could impact the movement of labour and goods, which would affect industrial production significantly.
About 56% of the CEOs expressed their concern over loss of production of up to 50% if there were restrictions on the ecosystem that supports the movement of goods, the CII note said.
In Maharashtra, the April sales are expected to be 70% lower than the average as the first 15 days were slow too, Amar Seth, chairman, Maharashtra, Federation of Automobile Dealers Associations (FADA), told ET Auto.
“Currently we can’t even register the (sold) vehicles as the regional transport offices (RTOs) are shut. This also means that we are not able to do home delivery,” he said.
Meanwhile, some members of FADA, the auto dealership lobby, have requested the Chief Minister of Rajasthan Ashok Gehlot to allow car dealerships to open for a few hours with limited staff so that at least the deliveries can take place, Nikunj Sanghi, founder, JS Fourwheel Motors Pvt Ltd, said.
“The pending vehicle deliveries can be done as everyone will need their own cars during the lockdown,” Sanghi said, adding that the lockdown measures immediately after the harvest season would crush the buyer sentiments.
“After the local lockdowns we will see again a spike in job losses and pay cuts coupled with negative sentiments,” he warned.
Large auto dealerships based in other states are also worried over the limited or delayed supply of vehicles shipped from the states currently having partial lockdowns.
Manish Raj Singhania, managing partner, Ralas Motors, a M&M dealer from Raipur, and John K Paul, managing director, Popular Vehicles, one of the largest dealerships of Maruti Suzuki India in Kerala, expect a fall of nearly 50% of the monthly retail sales in their respective states.
While Chhattisgarh sells around 17,000 vehicles a month, Kerala sees monthly sales of about 15,000 cars.
“Although there is no lockdown announced in Kerala yet, regional lockdown in states like Maharashtra is already hampering the supply of vehicles, which is ultimately delaying deliveries. Even if we do not see complete washout like last year, these sporadic lockdowns will pull retail sales down by 45%-50%,” Paul said.
How does the lockdown in six states impact India’s car industry
| States | % Contribution to overall sales | Lockdown Duration |
| Maharashtra | 10.5 | 15 days |
| Uttar Pradesh (5 cities) | 4.4 | 7 days |
| Rajasthan | 5.2 | 14 days |
| Delhi | 4.7 | 6 days |
| Madhya Pradesh | 4.4 | 7 days |
| Chhattisgarh | 1.7 | 7 days |
| Total | 30.9 |
