As Coronavirus Locks Down India, Domestic Car Sales Plunge

The coronavirus-related lockdown in India, in tandem with higher prices due to tougher emissions standards by the government, has led to a plunge in car sales. Auto plants also shut down in late March.

India’s top automaker, Maruti Suzuki India Ltd., a subsidiary of Japan’s Suzuki Motor Corp. (SZKMY), reported that sales in March plunged year-over-year by 47% to 83,792 units. Exports tumbled 55% to 4,712 units from 10,463 in the year-ago period.

Maruti Suzuki – which controls about 50% of the Indian passenger auto market -- finished fiscal 2020 with total sales of 1.5 million units, down 16.1% from 1.8 million in the prior fiscal year.

"The shutdown started only last week, so the fall is still steep even if it is not comparable," said Shashank Kanodia, an auto analyst at ICICI Securities of Mumbai.

India’s second largest automaker Hyundai Motor India, a wholly owned subsidiary of the Hyundai Motor Co. (HYMTF) of South Korea, also saw a 47% decline in March sales. The company sold 32,279 units during March, versus 61,150 units in March 2019. Hyundai suspended operations at its Chennai plant on Mar. 23.

Other automakers reported even steeper declines

Tata Motors, the auto unit of conglomerate Tata Group, said passenger vehicle sales plummeted 68% in March; Mahindra & Mahindra, which manufactures sports utility vehicles, recorded a huge 88% decline; and Toyota Kirloskar Motor, the Indian subsidiary of Japan's largest car manufacturer, Toyota (TM), said its March sales fell 59% to 8,022 vehicles.

"Our performance in March has been muted on account of the impact of the current lockdown related to Covid-19 and the disruption in our [government-mandated emissions] ramp-up plan,” said Mahindra and Mahindra Automotive Division Chief Executive Officer Veejay Ram Nakra.

Kia Motors India, a subsidiary of Kia Motors of South Korea, saw sales plunge from 15,644 units in February 2020 to 8,583 units in March 2020.

Similarly, Honda Cars India Ltd., a subsidiary of Honda Motor (HMC) of Japan, reported a 78.5% sales decline in March.

"The last financial year was the most challenging for the automotive industry because of [the] economic slowdown, poor consumer sentiment [combined] with transition challenges to [government-mandated tight emission standards]," said Honda Cars India Sales and Marketing Senior Vice President and Director Rajesh Goel.

Even before coronavirus shut down almost all business activity in India, the country’s auto industry was already dealing with weakening demand caused by the country’s slowing economy. Automakers also had to raise their prices after the government pushed tougher emissions standards on the industry.

The Society of Indian Automobile Manufacturers has estimated that closings by automakers and auto part manufacturers will result in daily revenue loss of more than 23 billion rupees ($300 million).

Sales of commercial vehicles have fared even worse, cratering by almost 90% in March across the board. Ashok Leyland reported 90%-plus declines across its various categories of vehicles. Tata Motors’ sale of trucks and buses slumped 87%.

Tata has now changed its reporting policies – from now on, it will post sales numbers on a quarterly basis rather than monthly to "avoid needless short-term volatility" and help investors "focus on the long-term drivers of the business.”