The COVID-19 pandemic has resulted in most parts of country being under a lock down till 14 April. Almost all major car manufacturers in the country have shut down their manufacturing facilities till 31 March, which is now expected to officially stretch to 14 April. Employees have been advised to work from home during this period and regular work will resume after analysis of the situation. Major automotive brands namely, Maruti Suzuki, Hyundai, Tata Motors, Kia Motors, Mahindra, Toyota, Renault and Nissan have stopped production at their respective facilities. Luxury car manufacturers like BMW, Mercedes-Benz, Volvo and Rolls Royce have also stopped production until there is an improvement in the situation.
The COVID-19 outbreak and the lockdowns have occurred, perhaps, at the worst possible time for vehicle manufacturers in India. There has been a steep drop in car sales for more than a year and the current scenario has further affected the automotive industry. Sadly, global car sales is expected to be affected this year with reports claiming an industry slump of up to 15 per cent. In the light vehicle segment alone, sales are expected to drop to less than 80 million units this year as compared to 90 million units last year.
The situation is tough for Indian automakers as some of the car manufacturers are still left with unsold BS4 inventory in their stockyards. The BS4 compliant vehicles cannot be sold from 1 April 2020 and with the dealerships unlikely to open before the deadline, the vehicle manufacturers are likely to be left with a large amount of unsold inventory. The Federation of Automobile Dealers Associations (FADA) had once again approached the Supreme Court of India seeking extension of BS4 deadline to 31 May, 2020. Back in February, the apex court had rejected a similar application filed by FADA, on the grounds of unsold BS4 inventory and slow moving sales. This time around, FADA seeks an extension citing COVID-19 (coronavirus) outbreak in the country which has further slowed sales for the BS4 stock. The application cites that counter sales have dropped by 60-70 per cent across auto dealerships in the country in the past few days as the customer walk-ins have reduced to a trickle over the fear of spreading the virus.
Indian automotive companies have been exporting a considerable amount of their products to global markets. With the lockdown in most major markets, the car sales are bound to witness a steep drop for the next few months.
