Oh no ... zero sale of the car Corona's smile

Mumbai / New Delhi, Ta. 28 April 2020, Tuesday

The auto sector is being hit the hardest by the drastic implementation of lockdowns across the country. For the first time in history, the auto industry, which accounts for 15 per cent of the government's total tax collection, will record zero sales (not a single vehicle sold) in April. This adverse situation is likely to continue during the month of May.

The automobile industry came to a complete standstill in April due to the lockdown. All the big plants and small factories in the industry have been locked since the last week of March. There are no concessions. On the other hand, four wheeler, two wheeler, three wheeler, all types of commercial vehicles as well as tractor show rooms as well as all dealers are also locked there. On the other hand, due to the lockdown, the process of vehicle finance has also come to a standstill.

Thus, in these circumstances, not a single vehicle from any of the various segments could be sold by any company. Thus for the first time in the history of the automobile industry this month will record zero sales. Given the current state of the corona virus, the automobile industry is unlikely to see a significant improvement in sales even in May.

According to automobile industry sources, the crisis in the auto industry will continue for a long time due to the serious impact of the corona on the economy and consumer sentiment. At the same time, the industry expects to see sweeping changes in the way the auto industry operates in the near future. However, given the current unfavorable situation, the month of May will be even worse and the atmosphere of uncertainty will remain even after that.

Putting the automobile industry in trouble will also have an adverse effect on the country's economy. The auto industry provides direct or indirect employment to an estimated 40 million people and accounts for more than 8% of the country's GDP. The automobile industry also accounts for 15 per cent of the government's tax revenue.

The government recently allowed factories in areas outside the corona virus hotspot to start operations but auto companies have not yet started their plants. Because, they are waiting for the complete ecosystem of suppliers, dealers and financiers to start. Even if the government lifts the lockdown on May 3, companies are likely to be able to start production only partially in mid-May.

Auto companies get the largest supply of raw material and components from major and other locations like Pune, Gurgaon-Manesar and Chennai, and the situation in these areas is so dire that the lockdown is unlikely to end in the first week of May.

Given all these developments, if the auto industry starts within three months, that is, if the supply chain is restored and the dealer is also dispatched, it will be a great achievement in the present times. The government should open up the markets in phases. Dealers in semi-urban and semi-rural areas should first be allowed to operate to sell motorcycles, three-wheelers and small commercial vehicles. Consideration should then be given to other vehicles. It doesn't look like the industry will start all at once.