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Car sales stay low in May, rural and semi-urban markets drive numbers

Maruti Suzuki India Ltd sold 13,865 units in May — an 89% fall over the sales of 1,23,250 units in the same month last year.

By: ENS Economic Bureau | New Delhi | Published: June 2, 2020 3:00:14 am
coronavirus covid-19 impact on carmakers, coronavirus covid-19 impact on automakers, coronavirus covid-19 impact on automobile sector, business news india, maruti suzuki may 2020 car sales, maruti suzuki may 2020 auto sales, maruti suzuki may 2020 domestic sales While 13,865 units is the wholesales (company sale to dealer) for MSIL, officials say that retail sales (dealer to customer) were much higher at over 30,000 units in May. (File Photo)

Though far from attaining normalcy, car manufacturers did breathe a new lease of life in May, as they restarted production and sale of vehicles. Led by supply restoration and demand uptick in semi-urban and rural areas, which have been less impacted by COVID pandemic, Maruti Suzuki India Ltd (MSIL), the leading passenger vehicle manufacturer, sold 13,865 units in May — an 89 per cent fall over the sales of 1,23,250 units in the corresponding month last year.

While 13,865 units is the wholesales (company sale to dealer) for MSIL, officials say that retail sales (dealer to customer) were much higher at over 30,000 units in May.

“While disposal of cars from the company was impacted by lockdown restrictions and several urban dealership locations falling in containment zones, dealers in rural areas managed to liquidate their inventory, leading to higher retail sales,” said Shashank Srivastava, executive director, MSIL. He added that the company witnessed an increase in the percentage of sales from smaller towns and rural areas as most of the containment clusters are in urban areas.

Stating that retail sales have come back to almost 25 per cent of the average monthly retail sales of 1.18 lakh units in FY20, Srivastava said that rural market may lead the sales revival.

“Though it is too early to say, but I think that rural rebound may be faster. While the impact of COVID is less there, the Rabi crop has been good and also the government has been giving income support in rural areas,” added Srivastava.

He, however, said that rural income may get impacted by migrants returning to native towns and villages, and also on account of decline in repatriation of money from urban to rural areas.

Even Toyota Kirloskar Motors (TKM) said its retail sales have been better than wholesales.

Naveen Soni, senior vice president—sales & service, TKM, said, “The market has been slow and with demand being less, we have been able to wholesale only 20 per cent of what we would have clocked under a normal situation. However, retail sales have been much higher compared to wholesales, thereby helping us reduce the month closing inventory levels at dealerships. We have also seen a significant surge in customer orders and enquiries online, through digital platforms.”

On Sunday, TKM announced that it sold a total of 1,639 units in May this year — a decline of 86.5 per cent over its sales of 12,138 units in the domestic market in May 2019. The company said that while it resumed production in its plant in Bidadi on May 26, it has been catering to the pending orders.

In addition to wholesale despatches of 13,865 units in the domestic market, MSIL also exported 4,651 units, following resumption of operations at the Mundra and Mumbai ports. The company had resumed its manufacturing operations post-lockdown beginning May 12 at its Manesar facility and from May 18 at its Gurugram facility.

Suzuki Motor Gujarat Pvt Ltd too resumed production from May 25. Even TKM, which exported 928 units in May, said that it has resumed operations in more than 300 Toyota outlets across the country, with ongoing sales operations in close to 220 outlets and service operations in more than 230 outlets.

Honda Cars India announced that it dispatched 375 units in the domestic market in May and said it delivered over 1,900 units to its customers.

Among two-wheeler manufacturers, Hero MotoCorp said it dispatched 1,12,682 units of two-wheelers in May 2020. The company, however, said that its domestic sales, retailed more than 160,000 units of motorcycles and scooters in May.

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