The Indian automobile sector’s recovery last year was largely dominated by robust demand in the rural areas. However, the second wave of COVID-19 has affected rural parts as well, reducing their contribution.
The Indian automobile industry was well on its way to recovery after the pandemic and subsequent lockdowns in various parts of India took a toll on sales and operations. The problem was further compounded by low buying sentiment among the public as they looked to save money for rainy days instead of spending on new vehicles. However, car and two-wheeler sales in India started picking up in the last two-quarters of the FY 2020-21 but the second wave of COVID-19 threw spanner in the works. With the number of cases increasing drastically several states across the country announced lockdowns that impacted automobile sales and production. And of course, the buying sentiment has once again taken a hit as people are wary of spending money on new vehicles. This has slowed down the industry once again, as is evident in May 2021 sales figures where almost every automaker registered a decline as compared to April 2021. But while the automobile industry was quick to bounce back last year, it doesn’t seem to be the case this time. Shashank Srivastava, Senior Executive Director, Maruti Suzuki India Limited, while talking to Times Drive, said that the auto industry’s revival will be slower after the COVID-19 second wave as compared to the first wave. He explained that a major reason for the Indian auto sector’s recovery last year was the contribution by the rural market and that has decreased this time.
Shashank Srivastava elaborated that while the first wave of the pandemic had largely affected bigger cities, the smaller ones and rural areas had managed to keep themselves safe. However, the second wave has impacted the rural part of the country as well which is why a large number of COVID-19 cases has been coming from tier 3 cities and villages. This has taken a toll on the sales of automobiles in rural parts of the country and also lowered the buying sentiment. As a result of this, rural India’s contribution towards auto industry revival is not likely to be as intense as last year.
He further explained that the car market’s recovery this time will be on the shoulders of sales in urban cities. He noted that around 60 per cent of Maruti Suzuki sales are from the urban regions while the overall car industry in India racks up around 75 per cent of sales from the urban areas. Henceforth, the revival will be spearheaded by sales in urban towns and big cities this time.
Shashank Srivastava said that “Bharat can lead India but it cannot carry India” as far as the automobile sector’s recovery is concerned.