Economy

Auto volumes may skid as key markets turn pandemic epicentres

G Balachandar Chennai | Updated on April 09, 2020 Published on April 09, 2020

Extended lockdown in States such as Maharashtra, TN and Kerala likely to impact incomes, dampen buyer sentiments

Amid talks of a lockdown extension, the high number of Covid-19 cases in ‘key’ States threatens to hurt auto sales for a sustained period.

States such as Maharashtra, Tamil Nadu, Delhi, Kerala, Telangana, Andhra Pradesh, Rajasthan and Uttar Pradesh account for about half the passenger vehicles (PV), two-wheeler and commercial vehicle (CV) volumes in the country. Maharashtra, for instance, accounts for about 11 per cent of PV volumes in India. Its share of two-wheelers and CVs is 10 per cent and 14.5 per cent, respectively. Tamil Nadu accounts for 7 per cent each of two-wheeler and CV volumes, and 5.4 per cent of PVs.

Similarly, Delhi’s share in the three auto categories is in the range of 3-6 per cent. The two-wheeler market in Uttar Pradesh is sizeable, at 15 per cent of the country’s, while its PV and CV markets are at about 10 per cent each, according to Dolat Capital.

Kerala accounts for about 5 per cent of the PV market, while Telangana, Rajasthan and Andhra Pradesh also hold market shares in the range of 3-7 per cent in PVs, CVs and two-wheelers.

Spike in number of cases

But these eight States account for about 75 per cent of Covid-19 cases in India as of now. Barring Kerala, they have been seeing a spike in the number of cases over the past few days. They are becoming the epicentres of the pandemic, and are likely to face a longer lockdown, according to analysts at Dolat Capital.

While some of them have already indicated they may extend the lockdown beyond the present 21 days, the others are evaluating various options.

 

Though automobile companies are bracing for a slowdown in view of Covid-19 and the consequent shutdowns and drop in economic activity, the increasing number of cases in major markets is cause for worry. Not only will the outbreak impact the income levels in those States, but also hit buyer sentiments for a longer period.

Newcomers worst hit

The new entrants into the market will particularly see some impact in the near term. They had been generating a good portion of their sales from the top cities pre-pandemic. Now, the lockdown and weak sentiments may pose challenges, according to an auto analyst at a leading brokerage firm.

It is still not clear how the recovery will vary by region and by State. But, if the lockdown gets extended in the large cities, automakers may have to depend on rural markets for volumes.

“Considering the current conditions, we believe that the impact on a few categories, such as CVs, tractors and premium vehicles, is likely to last longer than the lockdown period. Some other categories, such as the economy and executive two-wheelers, entry-level cars, tyres and batteries, should experience a revival in the second half of the current fiscal, said Dolat Capital analysts.

Published on April 09, 2020

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.