Automobile industry, especially the passenger car segment was going through a rough weather in the last phase of 2010s. The experts attributed it to the economic slowdown,customers awaiting the new emerging electric vehicles, new stringent emission control protocols and the new vehicles expected, culture shift by the newgen on their mobility requirement from  product to  service (thanks to the Uber, Ola services)…

The sales turned south  year-on-year and month-to-month. Then came the Covid19. Assessing its impact on the various industries, it was stated that the automobile industry would take at least three quarters of a year, ie nine months to recover. However the September 2020 figures on sales of passenger cars in India was a surprise to many.

The overall sales in September 2019 was 23% down from that of 2018, all the players showed downward movement except Renault, which recorded 30% increased sales. Among the others, there was a search for the one having had the least impact, and Hyundai took the trophy among major players, with only 15% fall in sales.

Come September 2020, the overall sales is up by 32 % from 2019. The sales has over taken the 2018 figures. To be precise, 5029 more cars were sold than in September 2018. All players in the market are showing an increase in sales compared to their own sales in 2019, except Toyota, Nissan-Datsun, Volkswagen and MG. The highest figure in percentage growth is registered by Tata 162% and then Kia 147%. Remember, Kia made an entry in the Indian market along with MG only in 2019.

The above percentage figures can be deceiving since they are based on their own performances. We shall look at the market share to have a comparative performance evaluation of the various players.

The figure below gives us an overall view of the passenger car market in India vis-a-vis the players therein.

Maruti Suzuki has half the market share, meaning they sell as many cars as all the other players put together. In other sense every other car sold in India is from Maruti Suzuki stable. The only other player with a two figure market share is Hyundai and all the others command only a single digit market share. From September 2019 to September 2020, only three players namely Tata Motors, Kia Motors and Suzuki have captured more market share, 3.6%, 3.0% and 1.0% respectively. All the others have lost ground varying from 1.8 % by Toyota to 0.10% by Skoda. [Decimal places are not depicted in the pie chart].

There is a strong contest for the third place in the car market among Tata, Kia and Mahindra with 7%, 6% and 5% market share respectively. Let’s wait and see who will win this race for the third position.

Insight

We don’t need a psychologist or an anthropologist to fathom the reason for such spurt in the sale of passenger cars during the rage of Covid19. ‘Unlocking’ process, better termed as ‘reopening’ has still to make available the public transportation to the public, and the ‘social distancing’ more appropriate term ‘physical distancing,’ the first step to prevent the pandemic from spreading, compels people to rely on their vehicle for moving around. If not a used vehicle, people go for the new vehicle to travel safe during this pandemic. So it is frantic buying or the fear of covid that make the sales of cars go up. In short the fear psychosis created by Covid19 has made a positive impact on the automobile industry. This growth is reflected in two wheeler sales as well, which is 12% up from the September 2019.

The future forward

Will the current hike in the sales of passenger cars be sustainable? Is it a turnaround for the industry? The economy which was in the slowdown even before the emergence of Covid19 is sliding down to a recession, as indicated by 24% fall in GDP in the first quarter of the financial year 2020-21. The commercial vehicle 2020 September sales is 2% down from 2019, another indicator of the economic regression.

The automotive players are excited and visible to be vying with each other in wooing the customers. It is a demanding time on all players in the industry to keep alive this positive performance in this gloomy environment.

The silver lining is that the agriculture sector, on which the largest section of India is dependent, shows a positive growth of 3.4% in the first quarter of 2020 – 21. This is truly reflected in the hike in sales of tractor by 15.5% during the corresponding period, we have  discussed above.