ZERO DARK APRIL 2020: Indian Auto Industry staring at Rs 92000 crore loss for 40-day lockdown

Rajesh Menon, Director General,  Society of Indian Automobile Manufacturers (SIAM) had recently stated that the Indian automobile industry witnessed one of its sharpest decline in domestic sales in March 2020 due to subdued demand and consumer sentiments which was further aggravated by covid-19 outbreak in the country.

Menon would not have ever fathomed that in the following month of April 2020 the industry would record zero domestic sales and maybe few exports. In fact, the month of April 2020 could go down in the history of Indian automobile industry as the darkest month. For the Indian auto industry, never has a new financial year started on such a disastrous note and never has it drawn an absolute blank for an entire month in terms of domestic sales.

 If one were to calculate by what SIAM has to say wherein each day of plant closure will trigger a loss of more than Rs 2300 crore in turnover for auto OEMS and component manufacturers, then what we are looking at is a colossal sum of Rs 92000 crore loss in turnover by any conservative figure. This figure has been arrived at by calculating the losses for the 40 days the industry will be shut from March 25 to May 03, 2020. If the country does not allow its plants to reopen after that, the losses will simply rise.

In the last few years, we have seen zero sales in a month for a few individual models of vehicles. The Nano small car from the Tata Motors stable recorded zero sales for the month of December 2019, right up to March 2020. So did UM motorcycle draw a blank in sales for several months until the company went belly up. Despite the government trying its best to promote electric vehicles, Mahindra Electric Mobility scored a duck in domestic sales for the month of March 2020. So did Mahindra’s Alturas for the same month.

So if the entire April 2020 month zero sales were to be made into movie and were titled Zero Dark April 2020, this movie could join the club with several others which have zero as part of their title. Remember movies like Zero Dark Thirty, Zero Days, Zero Effect, Zero Focus, Mission Zero, Population Zero, Absolute Zero and Zero Days? What will differentiate Zero Dark April 2020 from the others would be that, unlike the others, this one would be a real life story.

THE MISERY CONTINUES

The month of March 2020 was expected to be really bad for the Indian automobile industry because of several reasons.  A few of the reasons included consumer sentiments and subdued demand because of the industry moving from BS IV to BS VI which led to its own confusion and frustration among dealers, manufacturers and consumers alike. The covid-19 outbreak only aggravated the situation to a level never imagined which led to shutting down of automotive plants and dealerships across the country.

No one in the industry ever imagined that April 2020 would draw a complete blank, both for production and sales. This has never happened before in the Indian automobile industry’s long history. So how was March 2020? On the domestic sales front, passenger vehicle sales were 143014 units in March 2020, compared to 291861 units in March 2019, a decrease of (-) 51 per cent.

Even though the 2020-21 fiscal has started with a duck, the fiscal 2019-20 saw negative sales across the different segments, as compared to fiscal 2018-19. Passenger sales were 2775679 units in April-March 2020, compared to 3377389 units in the previous fiscal, a decline by (-) 17.82per cent.

 According to SIAM, commercial vehicles sales stood at 13027 units in March 2020 compared to 109,022 units in March 2019, a decrease of (-) 88.05 per cent.  Two wheeler sales during the period was 866849 units (1440593 units), a decrease of (-) 39.83 per cent.