Coronavirus: For the first time, India’s vehicle sales may be zero

Shuttered for more than a month due to the COVID-19 pandemic, India’s automobile manufacturers may not see a single vehicle sale in April. The monthly auto sales number due next week might just be a record-keeping exercise for the auto industry, which has never, in history, seen zero sales.

“We are looking at zero sales in April, a phenomenon we have not witnessed in history,” an official from Toyota Kirloskar, the maker of Fortuner SUV, told DH.

 A Maruti Suzuki official too echoed the sentiment.

Worse, auto manufacturers do not see any immediate succour even if the lockdown is lifted on May 3. The highly integrated vehicle manufacturing industry says it needs end-to-end supply chain to resume before commencing production.

India’s automotive industry is highly import-dependent too and re-engineering the supply chains will be difficult. Shifting to domestic manufacturing of components will take time.

Society of Indian Automobile Manufacturers (SIAM) has estimated production losses of around Rs 2,300 crore per day for auto manufacturers.

Several car manufacturers that DH spoke to said the road to recovery is nowhere in sight. India imports Rs 1.33 lakh crore worth auto components every year, with more than a fourth coming from China. Germany, Japan and Korea are the other suppliers.

“Starting from steering and braking systems, engine parts, alloy wheels and lighting systems for passenger vehicles to fuel injection pumps – all come from overseas,” said a leading vehicle manufacturer, adding, “We need shipping channels open with China, which accounts for 27% of total India’s auto component
imports.”

Many auto companies like Maruti Suzuki, Toyota Kirloskar, Honda Cars India and Hyundai Motors, whose production units fall in the green zone had been given permission to commence operations last week but they have not taken a decision on restarting production yet.

Toyota Kirloskar, which imports components for its range of passenger cars from its parent in Japan, said that even after the lockdown is lifted, it would be difficult for it to start manufacturing anytime soon.

“Since air travel is shut on international routes, it would be difficult for us to source these components. We have to look for alternatives from the domestic market,” Parasuraman, deputy managing director, Toyota Industries Engine India Pvt Ltd said.

But the Rs 3.5 lakh crore auto components industry, which provides employment to 50 lakh people, is holding on to hope for vehicle manufacturers to place orders once the lockdown is lifted.

Automotive Component Manufacturers Association said the government must place the entire automotive industry on essential goods list. They should reduce goods and services tax (GST) to 10% from the current 28% on automobiles. 

The auto and auto parts industry, which contributes over 7% to India’s GDP and employs about four crore people, can emerge in the medium to long term if supported by a policy framework, said KPMG.