Prospective car buyers talk with a sales manager at a car showroom in Mumbai. Photo: AFP

The Indian automotive sector is facing the heat of the economic slowdown brought by the Covid-19 pandemic. Automobile registrations across the country dropped by 32% in April from the same period in 2019, according to a report by the Federation of Automobile Dealers Association.

With India under a complete lockdown in April 2020 and a single vehicle being sold, a year-on-year comparison is not possible, the association added.

However, what is more significant is that passenger vehicle registrations, which have been in demand as people shun public transport for fear of the virus, also declined 11.56% this April to 208,000 vehicles from 236,000 in 2019.

In March, while the overall new vehicle registrations dropped by 28.64% from last year, passenger vehicles recorded growth of 28.39%.

All other categories, barring tractors, showed a sharp decline in April this year from 2019. Tractor registrations showed a marginal increase of 3.52% to 38,285 vehicles in April, compared with 36,984 in 2019.

The worst hit was three-wheeler registrations, which were down 55.59% with 21,636 registrations in April 2021 compared with 48,722 in 2019. Commercial vehicles declined 34.58% to 51,436 registrations versus 78,630 in the same period.

In the case of two-wheelers, the downturn was 35.35%, with 865,000 registrations last month compared with 1.3 million in April 2019.

Fiscal year

However, for the financial year 2020-21, vehicle registrations have been the lowest in the last eight years as the country went through a two-month-long lockdown last year to fight the coronavirus.

Total vehicle registrations fell 29.85% to 15.27 million units, down from 21.76 million in 2019-20. Apart from tractors, all other categories registered sharp falls in sales – three-wheelers (64.12%), commercial vehicles (49.05%), two-wheelers (31.51%) and passenger vehicles (13.96%).

Grim outlook

Association President Vinkesh Gulati said the second wave of Covid-19 was now spreading beyond urban areas to the rural belt, resulting in falling registrations across the country. During the first wave last year, the rural market had remained upbeat and had marginally offset a sales slump in urban markets.

The trade body also said the first nine days of May saw extremely lean sales as the lockdown announced by many states led to closures of showrooms in these regions. “Even where dealerships are open, the walk-ins have dropped to 30% and customers are delaying their purchase decision,” it added.

As for any recovery, the association feels it will take much longer this time than during the Covid-19 first wave last year.

Many car and two-wheeler companies have announced maintenance shutdowns as they see a sales slump this month and want to avoid inventory pile-ups.