One year of lockdown: Covid-19 may have changed the way you commute
While the need for personal mobility increased significantly during the pandemic, the buying capacity of consumers was also hit due to pay cuts and job losses across sectors
A lot has changed in the last one year in the automobile sector, especially for the two-wheeler and passenger vehicle category. According to a parliamentary panel report, passenger vehicle sales dropped 78.43 per cent in the April-June 2020 quarter during Covid-19 outbreak, declining for the ninth straight quarter and making it the longest slowdown in 20 years.
According to a media report, the auto industry suffered losses worth more than ₹2,300 crore in turnover for every single day of closure.
The demand started picking up from July 2020 with the phased easing of lockdown. As people prioritized social distancing, they drifted away from shared mobility. This effectively translated into higher sales of affordable personal vehicles, especially in the entry-level category.
While the need for personal mobility increased significantly during the pandemic, the buying capacity of consumers was also hit due to pay cuts and job losses across sectors. The stagnant sales numbers during January and February 2021, are a testimony to this trend. The impact of second wave of the pandemic on the sector will be visible next month.
“Consumer spending, which is the driving force behind India’s economy and accounting for 60% of the GDP, fell 2.4% showing signs of sluggishness despite the quarter being in the festive season. This also reflects that consumers are still uncertain and worried about their income and cautious about spending,” concerned Vinkesh Gulati, President of Federation of Automobile Dealers Association (FADA).
Due to liquidity crunch and concerns over long-term growth, auto companies are increasing prices. On 22nd March, Maruti Suzuki India announced a price hike of 1-6% on all models. It would be effective 1st April 2021 onward. Following the suit, Renault, Nissan, and a few others too have announced the price hike, ultimately putting pressure on buying capacity of a middle-class Indian.
However, auto companies have many new cars lined up to launch in an affordable range for 2021. Affordable electric vehicles, under Rs 10 lakh, are also in the line-up as consumers are drifting away from petrol and diesel vehicles amid rising fuel prices.