Maruti Suzuki expects sales boom after Coronavirus lockdown is lifted

There’s no doubt that the current coronavirus lockdown has affected the already-reeling auto industry perhaps like never before. However Maruti Suzuki is confident that the car sales will boom once the lockdown period is over.

Maruti Suzuki India Ltd. Chairman R.C. Bhargava has said that customers will be more interested in driving their own cars over public transport as social distancing will become a common practice. He said that India has changed and there will be a difference in how people see buying. When the lockdown is lifted, people will still be concerned to share space with one another, which will lead to increase in demand for personal vehicles. A similar reaction is observed in China today where car dealerships are seeing increased footfalls with Volkswagen (one of China’s biggest car companies) stating that traffic at the dealers now is nearly the same as March 2019. China is also witnessing a release of the pent-up demand from the two months of dormancy which has lead to a surge in car sales for some brands.

The COVID-19 pandemic which has pushed India to a complete lockdown has affected everyone and the auto industry, which is the fourth largest automobile market in the world, experienced a 52 per cent sales slump in March 2020. Car manufacturers including Maruti Suzuki, Hyundai, Mahindra & Mahindra and Tata Motors have stopped production and shut down the plants. The companies are currently looking to cut investments, which has put over 400,000 employees working in dealerships at risk. Federation of Automobile Dealers Association has written to the Prime Minister about the same and Society of Indian Automobile Manufacturers has reported that the automobile industry is losing 23 billion rupees every day the factories remain closed.

Mr Bhargava opines that once the factories are open, it may not be business as usual as the number of employees who are allowed to work at a time will be smaller, and the company will adjust the production accordingly. The company, which sells every second car in India, has reported a drop of 47.9 per cent in the month of March 2020 (YoY) for its domestic vehicle sales that includes both passenger vehicles and LCVs. Maruti Suzuki has also extended the free service, warranty and extended warranty for vehicles, which are scheduled to end between March 15th 2020 to April 30th 2020.

[Source – Bloomberg.com]