News By/Courtesy: Gunjan dayal | 04 Jun 2020 21:13pm IST

HIGHLIGHTS

  • Situation is not good.
  • Impact will last more than COVID-19.
  • Automobile hit hard because of virus.

The impact on coronavirus pandemic has been seen on almost every industry but it has a larger impact on financial markets and this impact is increasing day by day because cases are still increasing and there is ho hope of reduction in cases in near future which gives less clarity of impact on different sectors of this corona outbreak. Further, this is a current analysis of the impact on the auto sector of India. The center of this virus was China and it is also of the biggest supplier of India as it holds approximately 27 percent of India’s automotive part imports and also a major global supplier having almost all big brands factories in its country. Because of this, there has been a delay in production and supply of the same because of the lockdown, but the situation in China has been better lately so there is an expectancy of a recovery. But this impact is not only on the production and supply component but also on-demand of the same as the current economy is like on standstill mode and once things get better it will also take time to run again like before coronavirus outbreak. The lockdown began in March 2020 and there was a sharp drop in wholesales which disrupted the whole chain of production, supply, and demand. OEMs like MSIL, Hyundai, and Toyota outperformed their peers in the case of PVs, driven by early switching to BSVI and low BSIV inventory. While MSIL dispatched c. 77,000 units on the domestic market with sales declining 48 percent year-on-year, Toyota, sales declined 45 percent/41 percent respectively. In 2Ws, OEMs faced issues with the dealers over existing BSIV inventory, which was aggravated by the related shutdown of COVID-19 and a restricted relief from SC on the selling of BSIV inventory. Due to the expected BSVI transition in the latter half of March and early April, MHCV sales were most affected. Sales of tractors remained the industry’s only out-performer. The tractor sales of the market leader M&M decline 27 percent from a 40 percent decline in PVs/2Ws and MHCVs. According to a report released by Fitch Solutions, vehicle production in India is expected to contract by 8.3 percent in 2020 following an estimated decline of 13.2 percent in 2019. COVID-19 will also make it difficult for BSVI emission norms. HDFC Securities says it is expected that the Indian automotive industry will face several disruptions in the medium-term mobility services and electric vehicles. It said EVs are in the S-Curve start-up stage, while shared mobility is in the development stage. However, sustained profitability is essential to ensure the scale and longevity of operations and business models on the roadmap to profitable growth will continue to evolve. The growth now comes from 2W-based operators as the conventional cab-based aggregators (Ola, Uber) cannot extend beyond the broad meters. Start-ups like Bounce, Vogo, Yulu focus on the bike rental model while Rapido has adopted the model for bike aggregation. With a current market size of $150mn, the latter segment is growing exponentially (off a low base). Due to the economic fares/ improved connectivity, these services are expanding across Tier-I and Tier-II towns. There has been a spurt of development activity for electric vehicles following the FAME-II scheme. 2W OEMs launched luxury scooters (Ather 450x, Bajaj Chetak, TVS I) passenger car OEMs launched high-end goods, and Chinese and domestic OEMs promote electric buses. However, the mass adoption of the EVs is only expected in the medium term. The evolution of EV technology and ride-sharing services. It is believed that as the second vehicle usage in households gets cannibalized, industry growth rates are likely to moderate to sub 5% levels. Passenger cars will adopt alternate technologies such as hybrids on the winding road to electrification, while commercial vehicles (passenger buses) are early adopters of EV technology, led by state incentives under the FAME-II scheme. Limited charging infrastructure and elevated product prices is a key constraint though. So, this is the ongoing situation currently in India. 

THIS ARTICLE DOES NOT INTEND TO HURT THE SENTIMENTS OF ANY INDIVIDUAL, COMMUNITY, SECT, OR RELIGION ETCETERA. THIS ARTICLE IS BASED PURELY ON THE AUTHOR'S PERSONAL VIEWS AND OPINIONS IN THE EXERCISE OF THE FUNDAMENTAL RIGHT GUARANTEED UNDER ARTICLE 19(1)(A) AND OTHER RELATED LAWS BEING IN INDIA, FOR THE TIME BEING.

Section Editor: Pushpit Singh | 04 Jun 2020 22:36pm IST


Tags : #directimpactonautosector

Latest News







Copyright Kalyan Krishna MediaZ Private Limited. All rights reserved. Unless otherwise indicated, all materials on these pages are copyrighted by Kalyan Krishna MediaZ Private Limited. All rights reserved. No part of these pages, either text or image may be used for any purpose. By continuing past this page, you agree to our Terms of Service, Cookie Policy, Privacy Policy and Content Policies.