The year 2021 is the year of hope for all, so it is to the automobile sector. After the shock slowdown in the year 2020 due to the pandemic, the Indian automobile industry is recovering from the unprecedented lag in sales. Customers are showing greater, intent, interest, and curiosity.
While we are about to end the financial year with only a few days left car sales have been on the green patch. The total output at the beginning of the year 2021 was 3,03,833 units and in Feb, it did not lose any pace with 3,08,804 units being sold.
The economy is showing signs of recovery, also now with the vaccination drive carried out at full pace, 2021 for sure instills some confidence in the minds of both the consumer and the automobile manufacturers.
Automotive Sector Sales figures
The sales in March are expected to be higher following the ongoing growth trend that we have seen until now. Last year ended with a total volume of sales crossing 27 lakh units (27,73, 575).
In Q3 of FY 2021, sales reached 8,97,915 units. This was a record. With Q4 ending soon, the sector may still see a close finish. But matching FY 2019’s 33,77,463 units is not possible.
The bigger worry now is COVID-19. Cases are rising again as FY 2021 closes. Maharashtra has over 2 million active cases. Kerala has more than a million. Delhi, West Bengal, and Tamil Nadu together cross 2 million. Predicting customer behaviour is tough in such a scenario.
People may want to buy cars. But the fear of COVID could delay their plans. This may leave carmakers stuck. The real question is how will automakers handle FY 2022? Can they make it profitable for both buyers and themselves?
Impact on Automotive Sector
It is estimated that the carmakers in the automobile sector suffered losses of more than 2300 crores during the prolonged lockdown. The manufacturers have indeed kept on the fight and stayed operational following the COVID 19 standard operating procedures. Optimum usage of resources and a move towards digitalization have kept the cashflows positive by reducing cost. The carmakers in the Indian market have felt the shortage of key components like semiconductors, chips and steel which has reduced their overall manufacturing capacity. This has directly hit the overall sales as production falls short compared to the market demand for passenger vehicles.
Big players of the automobile sector like Hyundai Motor India, Toyota Kirloskar Motors, Maruti Suzuki, Mahindra and Mahindra, Honda Car India, and Ford have found it difficult to touch the green light, whereas the other persistent players like Renault, Nissan, MG Motor, and Kia Motor have caught more attention of the customers with their modernistic architecture, design, and features.
So far it has been a story of persistency and strong recovery. The impact of COVID – 19 continues to wreck trades and economies of nations, still, the Indian automobile sector has been able to tame the affects to a huge extend. Starting the fiscal year of 2021 with zero sales value the car industry has recuperated well showing the strongest sales record ever in the H2 and not to tell the month of March yet to be over expectations are high.
Performance
In Q3 of FY 2021, sales touched 8,97,915 units. This set a new record. With Q4 nearing its end, the sector could still have a close finish. But expecting the industry to match FY 2019’s 33,77,463 units is unrealistic.
The concern now is different. As FY 2021 ends, rising COVID-19 cases are troubling automakers. Maharashtra alone has over 2 million active cases. Kerala has crossed a million. Delhi, West Bengal, and Tamil Nadu together report over 2 million cases. This makes customer behaviour hard to predict.
Buyers may want to purchase cars. Yet, the growing COVID numbers may trigger fear. This could delay buying decisions. Car manufacturers may then find themselves stranded.
The key question is how will automakers plan FY 2022? Can they make it profitable for both customers and themselves?
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