By Amit Panday
New Delhi: With the two-wheeler demand completely falling off the cliff in April and no new fresh bookings for passenger cars in states witnessing partial lockdowns and restricted movements as the country continues to record the sharpest spike in new covid-19 cases, several auto dealers are worried that the pandemic-induced national crisis will have grim after effects spilling over to May.
The June quarter will be hit if the current crisis persists, at least 6 auto dealers from different regions told ET Auto.
Vehicle dealerships continue to remain shut across the most impacted states such as Maharashtra, Rajasthan, Madhya Pradesh, Delhi and several other regions as the state authorities work to curtail the rapidly spreading infection and ramp up the vaccination drive.
Hardly any sales were reported from the festive season nor any demand from the rabi harvest. Schools and colleges remain closed, which has further deferred recovery in the scooter segment.Motilal Oswal report
Meanwhile, this emergency-like situation comes at a time when typically the demand for vehicles rises on the back of festivities – Holi and Navratri across the Hindi belt and Gudi Padwa in Maharashtra – and the marriage season. This is also a month of strong rural demand for two-wheelers and cars as the Rabi harvesting is under way and farmers have money in their hands.
“We have already lost the festive and the marriage seasons in April, which typically see high demand for two-wheelers. That has come to a complete halt. In cars, we don’t see fresh bookings in this scenario and Q1 looks very tough, yet again. Q2 is typically the weakest quarter due to the monsoons and the buyers postpone their purchases for the festive season,” said Nikunj Sanghi, founder at Alwar-based JS Fourwheel Motors Pvt Ltd.
“With the way covid-19 cases are surging by the day, it looks like the impact will spill over to May. Vaccinating people across the country while taking control of the current situation will take months,” he said, adding that while partial lockdowns are impacting people across the service and business classes, the buyers’ sentiments are crushed in the current scenario.
Body blow for two-wheeler demand
An Andhra Pradesh-based dealer of Honda scooters and motorcycles said that two-wheeler retail sales are down by at least 40% during April when compared to April 2019.
“There is a lot of inventory but no buyers. Customer sentiments are deteriorating, as Andhra Pradesh is about to record 10,000 new covid-19 cases on Thursday. People across the poor and lower middle class categories are worst impacted. Many people are withdrawing their provident funds to survive. Our showroom footfalls have dropped sharply this month,” he said, requesting anonymity.
Meanwhile, a Maharashtra-based Hero MotoCorp dealer, who wished not to be named in the story, confided that there are over half-a-dozen trucks loaded with Hero motorcycles and scooters parked across his multiple showrooms, all waiting to be unloaded at a time when stores are shut and there is no demand.
“Gudi Padwa and Navratri were a washout. We are seeing booking withdrawals in large numbers,” he said.
According to a report by Motilal Oswal Financial Services Ltd., the inventory at Hero MotoCorp (up to 60 days), Bajaj Auto (up to 50 days) and TVS Motor (up to 40 days) was manageable at the start of the month, with a supporting number of enquiries and bookings. However, dealers saw a significant increase in cancellations with the rise in covid-19 cases.
“Hardly any sales were reported from the festive season nor any demand from the rabi harvest. Schools and colleges remain closed, which has further deferred recovery in the scooter segment,” the report said, adding that the dealers are skeptical about strong recovery post second wave.
“Smaller cities are seeing the impact of the second wave unlike the first wave last year. Unlike the first wave, the second wave would see limited benefit from pent-up demand as people have lesser savings because of slow economic activity in FY21, minimal cash inflow from migrant relatives and high medical bills,” the report cited.
Overall new car bookings slow down
some models, there are hardly any new bookings for cars across the most impacted regions.
Meanwhile, dealers based in states that have not witnessed restrictions until now are still recording growth in the new passenger vehicle bookings. However, they remain worried about the timely supply of the vehicles.
“In comparison with the first week, the second week of April has seen a 40%-60% drop in the enquiries and bookings. Typically, 70% of monthly retail sales are recorded by this time in April. But retails are impacted. That said, the deliveries could get delayed but there are no covid-19 related booking cancellations yet,” Garima Misra, managing director at Ahmedabad-headquartered Landmark Group told ET Auto.
“If we are able to curtail the situation within the next 15 days then we will be able to cover up in May. If not then this becomes a risky scene,” she warned.
Meanwhile, Kochi-based Popular Vehicles is also recording growth in the number of new bookings.
“There is a 5%-10% growth in new bookings. However, the supply of vehicles is delayed and it is becoming worse with new restrictions implemented in the other regions. We envisage that the situation might remain grim for some months and improve from July – August,” John K Paul, managing director, Popular Vehicles told this publication. He estimates that sporadic lockdowns may pull retail sales down by 50% YoY.
