May to be the worst month in auto, sales may fall 70-80%

May to be the worst month in auto, sales may fall 70-80%

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Due to the lockdown, the May month is surely going to receive a setback. The second Covid wave and local lockdowns have forced 75% of auto retail stores—20,000 out of 26,500 outlets—to shut down. Stores that are open see few footfalls. Results are grim. There’s immense pressure on the cash flows, and a potential revenue loss of Rs 20,000-25,000 crore at the retail level. Dealers across the country fear retail will fall 70-80% in May. 

Vinkesh Gulati, President for Federation of Automotive Dealers Association has said that customer walk-ins and bookings are negligible, which is not a good sign for the quarter as the industry is entering the lean season from June.

May will be one of the worst months for the auto sector. Outcomes are grim. There’s immense stress on the money flows, and a possible income lack of Rs 20,000-25,000 crore on the retail stage. Sellers throughout the nation worry retail will fall 70-80% in this month. 

The cautious optimism with which the automakers looked forward to FY22 has given way to worry as the sudden spike in the infections has led to lockdown in many key markets.

The impact of the second wave on the auto sector may be substantial, although it is too early to quantify that impact. It is anticipated that once the second wave subsides, there would be a third wave as well. So, the impact on auto sales might last through this calendar year.

Last month, April 2021 was hit by the Covid-19 second wave, wholesale despatches of automobiles have gotten impacted, with most automakers reporting a decline compared to March (sales growth cannot be compared year-on-year because a nationwide lockdown was in effect in April 2020). 

While companies say the demand for vehicles remains strong, they foresee challenges to supply chain, dealership activity and customer movement in the coming months, given the localised restrictions imposed by states in the wake of the second wave.


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