$306 million/day in estimated losses
Because of the lockdown that was introduced on March 25, the car industry is at a standstill. The coronavirus pandemic is taking a staggering $306 million per day from the manufacturers, dealerships and other entities involved.
As an example, in April 2019, 247,541 passenger vehicles and 68,680 commercial vehicles were sold in the country. April 2020 was the month with no activity for the car industry at all.
According to the Society of Indian Automobile Manufacturers (SIAM), the automotive industry is losing $306 million per day. The automakers include Mahindra & Mahindra, Maruti Suzuki, Hyundai, MG Motor, and Toyota Kirloskar. The picture was a bit rosier in April of 2019 when the industry sold 247,541 passenger vehicles, 68,680 commercial vehicles, and 1,684,650 two and three-wheeled vehicles.
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Quartz India reports that vehicle sales in the country were already on a downward path. In March, year-over-year domestic Maruti Suzuki sales dropped 47.9 percent, while Mahindra & Mahindra sales dropped 90 percent.
According to businesstoday.in, India’s largest carmaker Maruti Suzuki India Limited has said it reported zero sales in the domestic market, (including sales to OEM), in April in the wake of the coronavirus pandemic. The company cited zero sales due to compliance with the government orders to shut down all production facilities. The company also said that after the government allowed resumption of port operations, the first export shipment of 632 units was undertaken from the Mundra port.
Letter to the Home Secretary at the Ministry of Home Affairs
The lockdown has been extended to May 17 and will further depress an already tough situation for automakers. The industry has written a letter to the Home Secretary at the Ministry of Home Affairs asking for the automative sector to be allowed to open up.
“The automotive value chain is highly complex, integrated and interdependent. A vehicle manufacturer cannot commence operations if any one of its suppliers is unable to undertake production,” says a letter addressed to Home Secretary Ajay Bhalla. “Further production for a vehicle manufacturer would only amount to adding to inventory and thus blocking working capital incase dealers are unable to sell vehicles. If any element in any segment does not commence operations, the value chain will not be able to re-start.”
“With challenges of working capital across the sector, several of the players in the industry, right from the component suppliers to the dealerships, are faced with the challenge of staying solvent. Starting of economic activity in the sector is therefore critical and the only hope to infuse life back into this once vibrant industry,” the letter says.
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