Categories: Economy

Covid halt: FY21 auto retail sales feared to crash by 25 to 45%

Retail off-take in India’s automobile sector might just come to a screeching halt as Covid induced economic contraction hits the brake on showroom sales.

Accordingly, the auto sector is bracing for the mega impact with estimates ranging from 25-45 per cent deceleration in retail sales in a few segments on a year-on-year basis for 2020-21.

In fact, the same contraction rate can be expected in wholesales as “stocking activity is currently taking place at dealership level in tune with retail numbers” said Federation of Automobile Dealers Associations' (FADA) President Ashish Harsharaj Kale.

Even though just an estimate, the forecast is in part co-related to the prediction of an overall dip in India's GDP growth rate.

National and international monetary agencies have cited a range of negative 4 .5 to 5 per cent contraction in India's GDP growth rate.

“If the projected economic contraction holds true, it would surely hit the sectors that depend on discretionary spending,” Kale said.

According to Kale, there has been a slow pickup in sales during June. The supply side too is not fully restored. However, he is hopeful of further government support to prop-up the economy and the sector.

“We expect a good pick up by September onwards during the festive season. By that time, hopefully, the complete supply chain will also be restored,” Kale said.

“We will also be able to see the positive impact of various schemes under government's stimulus programme, especially in the rural areas.”

Besides, Kale pointed out that off-take in rural areas has shown rapid improvement and demand there should bounce back sooner than expected.

“Motorcycle, tractor and small commercial vehicle segment have shown positive movement,” he added.

“The bounce back in sales is first expected to take place in rural areas. A good crop last season and expectations of a healthy monsoon and other factors support this prediction.”

As per FADA, nearly 85 per cent of all dealerships are operational across the country now

The association represents over 15,000 automobile dealers having 25,000 dealerships, accounting for 90 per cent of automobile sales and service in India.

Its members employ over 40 lakh employees in the country at dealerships and service centres with 25 lakh direct employees and another 15 lakh indirect depends..

IN Bureau

Recent Posts

India-UK FTA will propel bilateral trade, strengthen supply chains: Jaishankar during meeting with UK Foreign Secretary

Noting that the recent conclusion of the India-UK FTA and the Double Contribution Convention is…

12 hours ago

“Strengthening early warning systems, coordination is crucial”, says PM Modi addressing ICDRI

Highlighting the significance of strengthening early warning systems to mitigate risks from disasters, Prime Minister…

13 hours ago

Centre raises financial threshold for procurement of scientific equipment, consumables

The Central government has raised financial limits under the General Financial Rules (GFRs) for procurement…

14 hours ago

Would be my pleasure to welcome PM Modi for G7: Former Canada MP Chandra Arya calls India “indispensable partner”

Former Member of Parliament of Canada, Chandra Arya, has said it would be his pleasure…

16 hours ago

UK Foreign Secretary Lammy to meet PM Modi; to discuss bilateral economic and migration partnership

UK Foreign Secretary David Lammy will meet with Prime Minister Narendra Modi on his second…

16 hours ago

“We can control any situation”: Gujarat Health Minister calls Omicron ‘not serious’, says all arrangements in place

Gujarat Health Minister Rushikesh Patel on Saturday noted that the state is fully prepared for…

17 hours ago