Automobile sales nosedive 55% in May, Will June bring respite with ease in COVID-19 restrictions?

New Delhi: In the month of May, automobile sales dropped by over 55% month on month (MoM), courtesy of the lockdown announced in many states across the country to tame the second wave of COVID-19. In comparison to May 2019, auto sales plummeted by over 70%. 

The drop in sales was witnessed across all automobile categories. Two-wheelers sales nosedived by 53% while passenger vehicles saw a 76% dip. Tractors and commercial vehicle sales dipped by 57% and 66%, respectively. Also Read: Centre sets speed limit for vehicles in Delhi, heavy fines for over speeding

However, auto sales are witnessing a comeback in June. In the first nine days of June, automobile dealers are witnessing strong demand, said Vinkesh Gulati, president of the Federation of Automobile Dealers Associations (FADA). "The first nine days of June saw a better start than expected due to pent-up demand.”

Gulati expects that at the current pace, June 2021 figures may result in almost equivalent sales when compared to June 2020. "Overall demand recovery will be slow as rural markets continue to struggle with post covid effects," he added. Also Read: Maruti Suzuki to launch new car cheaper than Alto? Check expected price and other features

"While a handful of OEMs have announced financial help to their channel partners, others are yet to do so. Hence, FADA humbly requests all those OEMs which have still not announced any financial assistance to kindly do it urgently," Gulati was quoted as saying by Times of India.

The ongoing lockdown is negatively impacting the business of automakers and auto dealers in India. The lockdown in a few states has lasted over 30-45 days and it is exceeding in a few areas in South India. 

Gulati noted that the revenue for most of the dealers are negligible as there were minimal sales. Therefore, dealers are likely to be facing troubles in repaying their loans. 

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