With the government relaxing a few lockdown restrictions, auto sales are likely to improve in June from the prior month. Sales, however, could still drop by over 25pc from June 2019, according to Federation of Automobile Dealers Associations of India (Fada).
The auto body states urban demand could continue to face headwinds amid COVID-19 outbreak.
But, the demand in rural areas is likely to bounce back faster, estimates manufacturer Hero MotoCorp. The vehicle manufacturer states that with the government’s efforts to boost the agriculture sector and hopes of good monsoon, the rural economy could thrive. Dealers in Tier 2 and 3 cities, could thus face lesser degrowth compared to the urban dealers.
In May, retail sales of passenger vehicles declined by 87pc to 30,749 units from 235,933 units in May 2019. Sales remained hit even though dealerships and workshops at some places had reopened in the month.
Retails sales of trucks and buses plummeted by 97pc to 2,711 units in May over 80,392 units in the prior year. Sales of two and three-wheelers dropped by 89pc and 96.34pc, respectively. The two-wheeler segment sold 159,039 units and 1,881 units of three wheelers were sold in May 2020.
Demand stimulus along with credit support could revive auto sales and build consumer confidence.