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India’s Mahindra expects car sales to take two years to rebound after COVID shock


05/29/2021


India’s Mahindra expects car sales to take two years to rebound after COVID shock
It will take at least two more years before car sales can inch back to their pre-pandemic peaks, said India’s Mahindra & Mahindra expects, even though the company’s chief said that the recovery prospects could be hurt by a slow pace of vaccinations.
 
The number of passenger vehicle sales in India dropped to only 2.7 million units in the last fiscal year which was the lowest level for the country in the last six year and well below the peak of 3.4 million units in fiscal year 2019 because of the Covid-19 pandemic ravaged 2020 and due to an economic slowdown in the Indian economy in 2019.
 
If the majority of the residents of India get inoculated and new Covid-19 cases ease which will help the economy to recover, sales of the vehicles of the company would rebound by fiscal year 2023, said Mahindra Chief Executive Officer Anish Shah.
 
"Getting back to full normal is going to depend on vaccinations ... (else) we will always have the fear of the next wave coming in and disrupting things again," Shah
 
So far India – the second most populated country of the world, has recorded more than 28 million cases so far which is exceeded only by the United States. There is currently a deadly second wave of the pandemic raging through the country and the highest monthly Covid-19 death toll since the pandemic began was reported by India in May this year.
 
Despite this only about 4 per cent of the total population have been completed vaccinated which was the lowest rate of inoculation among the top 10 countries in terms of infections.
 
There was a pick up in case sale in the January-March quarter which was abruptly brought to an end by a second, more deadly wave of infections which forced governments tin India to impose lockdowns again. That has significantly hit consumer sentiment and it is estimated that this will take longer to recover than before with respect to discretionary spending.
 
Rural India, which was relatively unaffected during the first wave of the pandemic in the country and which has partially offset the fall of sale and low demand for cars and other vehicles in the urban areas last year, is also getting infected by the virus in the second wave.
 
There was robust growth in the revenues from the sale of its farm sector vehicles last year for Mahindra which has about 6 per cent share of India's passenger vehicles market and is a major global manufacturer of tractors. However Shah noted that there has been a dip in the sale in May in the hinterlands of India.
 
The buyers in both the urban and rural India are not holding back on spending till the end of the current health crisis during this second wave of the pandemic, said Shah.
 
"This year we have seen our customers also worry about putting up money and buying anything, saying what happens in case someone (in the family) gets COVID," he said.
 
“It is about reaching a certain point where we don’t have to get into lockdowns once more,” he said. “If that happens, we will continue to be in this phase of two steps ahead and one step back.”
 
(Source:www.livemint.com)