The Indian auto industry, one of the most depressed sectors, is reeling amid the current epidemic. Based on the Federation of Automobile Dealers Associations (FADA), In May, vehicle registrations dropped by 54 percent month-on-month and 70.69 percent compared with May 2019.
Categories like two-wheeler (2W), three-wheeler (3W), and private vehicle and consumer vehicles saw an increase in registrations of 53 percent of the population, 76 percent, 59%, and 66%, respectively. Tractors, which were always on the upside, also saw a decrease in registrations for May, which was 57 percent.
Commenting on the latest numbers, Vinkesh Gulati, president of FADA, declared, ” The 2nd wave of covid has left the entire country devastated as there may not be a single household which did not get affected. Apart from urban markets, this time, even rural areas were badly hit. May saw continued lockdown in most of the states.”
He also stressed that the auto industry desperately needs assistance and noted that, aside from a handful of OEMs who have offered financial aid for their channel partners, others have not yet followed in.
The lockdown in force has been in place for more than 30 days. It is currently in effect throughout South India, and revenues for many dealers are minimal due to small sales. FADA has stated that dealers cannot pay their due loan tranche.
“This will ultimately lead towards default. Since there are no guidelines, extension of tranche is considered as restructuring of loan. This will ultimately have a negative impact on Dealers credit score as their CIBIL rating will get impacted,” Gulati stated.
FADA also addressed the Prime Minister, suggesting that banks should be able to grant the application of a 90-day moratorium for all dealers without a turnover limit instead of restructuring.
However, the initial 9ninedays of June witnessed increased sales, probably due to increased demand. FADA believes that if this trend continues, the sales numbers will be similar to those last year
The monsoons have arrived in India nearly on time, and if Met predictions are correct, FADA anticipates that there will be an increase in the demand for cars in the rural areas of India.