Covid-19 Impact: Automotive Sector Loses Speed And Traction

A series of setbacks faced by the automobile and automotive component sectors has brought about a slump in sales even as the transition to BS-VI emission norms has brought about a greater challenge. Not to forget that the outbreak of coronavirus has only added to the woes, Geyatee Deshpande takes an overall view of the industry and finds out the triggers.

- Geyatee Deshpande

India achieved the distinction of becoming the fourth-largest automotive market and the seventh-largest manufacturer of commercial vehicles back in 2018 with sales increasing by 8.3 per cent year-on-year. In this scenario, the two-wheeler segment dominated the market in terms of volume owing to a growing middle-class and a young population. Moreover, the sector’s growth was aided by growing interest of the companies in exploring rural markets with an expected increase in demand from them. However, the situation isn’t as rosy any more. Currently, the Indian and global equity markets have been very volatile.

The spread of the coronavirus and its impact on production and manufacturing lines has raised concerns among investors with their focus on the Indian automotive and automotive ancillary sector. There is an underlying current of anxiety and concern among investors given the fact that the automotive industry has been trapped in a downturn since a long time. Post a slight chance of recovery, the Auto index shows that returns have been negative for the past few years. This is a clear indication of the fact that the sector has reached its bottom. As of now, improvement in demand with surplus purchasing power remains the only hope for this industry.

A Bumpy Ride