Sales of cars, utility vehicles and vans fell by a third in the six months to September 30. Photo: STR/NurPhoto

Vehicle sales in India fell in the first half of the financial year to September 30, hurt by a Covid-hit economy, job losses, working from home and an uncertain outlook.

However, September provided a silver lining with sales of passenger vehicles, including cars, utility vehicles and vans, increasing 26.5% over the same month last year.

Sales of two-wheelers, including motorcycles and mopeds, rose 11.6% in the month but sales of three-wheeled vehicles plunged 72%, according to the Society of Indian Automobile Manufacturers (SIAM). It didn’t give September data for commercial vehicles.

Sales in the first half to September dwindled across all segments. Commercial vehicle sales fell by 56%, pointing to a severe downtrend in the economy. India’s gross domestic product contracted by 23.9% in the quarter ended June 30. The GDP is forecast to shrink in the next two quarters too because of lockdowns and risk aversion.

Cars, utility vehicle and van sales declined by 34% in the six months to September 30, while those of motorcycles and scooters were down 38.3%. Sale of three-wheelers such as passenger auto-rickshaws or tuk-tuks and those used for commercial purposes plunged 82.3%.

First-half sales this year were the slowest since 2016 for all the segments for which data is available. About 165,000 heavy, medium and light trucks and other commercial vehicle were sold in the first half of 2020, compared with 333,000 in the same period of 2016. About 880,000 cars and other passenger vehicles were sold between April and September 2020, compared with 1.49 million in the same period of 2016.

However, some segments saw recovery in the second quarter. During the quarter ended September 30, sales of cars and utility vehicles rose 17% while commercial vehicles fell 20%.

“The recovery has been driven by India’s rural markets which are buoyed by healthy yields and timely sowing for the next crops and progressive government support schemes and relatively lower Covid-19 impact,’’ rating agency ICRA said.  “A shift towards personal mobility in urban areas also provided some marginal respite.’’

It cautioned that some restocking of inventory for the forthcoming festival season could show strong movements from auto parts makers, but sustainability of retail demand after the festival season remains to be seen. India’s festival season starts on October 17 and culminates with Diwali on November 14.

ICRA said consumption and investment demand are likely to remain depressed for an extended period because of Covid-19, related health concerns and economic uncertainties. It forecasts the economy will shrink by 11% in the full year to March 2021. The Reserve Bank of India expects GDP could shrink by 9.5% in the year to March.

Plunging sales and shaky business confidence with uncertain outlook has prompted some manufacturers to review their plans. Harley-Davidson said last month it plans to exit India because of poor sales. India’s annual sales volume account for less than 5% of the company’s total. India is one of its worst-performing markets.

Following India’s two-month lockdown from March 25, and several lockdowns of varying durations and intensity across different states, except for agricultural and rural areas, most economic activity in urban areas remains restricted and is no more than a fraction of previous levels.

“The Indian automotive industry is working hard amidst this tough Covid-19 situation to increase production and sales,’’ said Kenichi Ayukawa, president of SIAM. Some segments are showing signs of recovery in the second quarter, he said. Car and motorcycle sales are picking up but from a low base in the previous year.

Still, automobile dealers report a pickup in sales of used cars, motorcycle and scooters in cities where public transport has still not been restored to its usual level. People wanting to avoid the risk of catching the virus on public transport are also buoying the second-hand market for cars and motorcycles.

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