Small and mid-size vehicles expected to lead post-COVID-19 recovery in India

Automotive sales witnessed noticeable growth in June 2020 after meagre sales in April and May. Retail activities picked up as the country witnessed relaxation in lockdown norms in most regions starting from 8 June. Major automakers including Maruti Suzuki and Hyundai have reported healthy growth in month-on-month sales volumes due to rise in demand for personal mobility and several other factors.

“Most auto dealerships across the country are now operational and the market is limping back on track. Data from market leaders indicates that new vehicle enquires and booking are improving and getting close to the pre-COVID-19 levels as the customers now have the option of booking vehicles at  dealerships as well as online. Maruti Suzuki reported that retail enquiries and bookings reached 80-85% of pre-COVID-19 levels in June 2020. Hyundai, on the other hand, reported to have received 20,000 enquiries and over 1,900 bookings through its online platform ‘Click-to-buy’ since its launch in March 2020.

“In terms of volumes, Maruti Suzuki reported domestic sales of 52,300 units in June 2020, which is 277% up from the previous month’s 13,865 units. Hyundai’s June 2020 domestic sales reached 21,320 units, up from 6,883 units in the previous month. The growth in volumes for both the companies is primarily accredited to small cars i.e., entry-level sedans and hatchbacks, driven by strong recovery in demand in the rural areas.

“On expected lines, small cars have witnessed healthy growth in demand. The prevailing economic instability due to COVID-19 is keeping Indian customers away from big ticket purchases. However, COVID-19 has also shifted consumer preference from ‘public’ to ‘personal’ mobility. Moreover, sudden spike in fuel prices and narrowing gap between the prices of petrol and diesel, have also impacted decision-making and preferences. All these factors have acted in favor of affordable and cost-efficient petrol variants. There has also been increase in demand for CNG vehicles amid the increasing prices of petrol and diesel.

“While the current sales volumes are significantly lower than 2019, the growth in June 2020 is positive and indicative of positive trends in coming months. Recent trends also suggest that COVID-19 and resultant economic conditions would have high impact on preferences and the product segmentation. OEMs are required to keep a track of the dynamic market environment and bring-in products that best suits the need of consumers in the present time.