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Dealership closure due to lockdowns a negative for auto industry: Maruti Suzuki

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According to the Society of Indian Automobile Manufacturers (SIAM), demand has been clearly hit due to lower consumer sentiment and dealership closures. The Federation of Automobile Dealers has said that recovery this time could take longer than last year and has added that rural demand has also been hit this time around. To discuss this forward CNBC-TV18’s Parikshit Luthra spoke to Shashank Srivastava, Senior Executive Director of Sales & Marketing at Maruti Suzuki, Vinkesh Gulati, President of Federation of Automobile Dealers Associations of India, Deepak Jain, President of the Automotive Component Manufacturers Association of India and Yadvinder Singh Guleria, Director of Sales & Marketing at Honda Motorcycle and Scooter India.

India has been grappling with a severe second COVID wave and the country reported a daily case count of over 3 lakhs for 26 days, starting April 22. The death toll on Monday touched a new high with 4,329 deaths. While no national lockdown has been ordered, state wise lockdowns have extensively slowed down economic activity.
The auto sector which was recovering from last year's COVID wave has been hit hard this time around. With at least 27 states currently under a lockdown, major automobile manufacturers have announced production shutdowns and are reviewing plans due to the uncertain medical crisis the country is facing currently.
According to the Society of Indian Automobile Manufacturers (SIAM), demand has been clearly hit due to lower consumer sentiment and dealership closures. The Federation of Automobile Dealers has said that recovery this time could take longer than last year and has added that rural demand has also been hit this time around.
To discuss this forward CNBC-TV18’s Parikshit Luthra spoke to Shashank Srivastava, Senior Executive Director of Sales & Marketing at Maruti Suzuki, Vinkesh Gulati, President of Federation of Automobile Dealers Associations of India, Deepak Jain, President of the Automotive Component Manufacturers Association of India and Yadvinder Singh Guleria, Director of Sales & Marketing at Honda Motorcycle and Scooter India.
Srivastava said, “COVID 2.0 has affected the industry very badly especially as you mentioned there are about 28 states under lockdown. We have almost 3,140 outlets out of which about 2,500 or so are closed today which means roughly about 81 percent of our outlets are closed. Although it has not been nationwide lockdown, but as far as retail showrooms are concerned yes it has been a negative for the auto industry.”
Gulati said, “Second wave has been very drastic and I feel anyone life has been untouched by the current wave. So overall not a good position on the ground, overall the commercial vehicles and two-wheeler segment is not that positive going on. Seeing the effect of the second wave all across and in the different segment, things are worrisome and it is not as good as what we had seen in the last COVID lockdown.”
Guleria said, “It is very difficult to compare FY21 versus FY22 because we had a pandemic last year itself. If we compare just on the month-on-month basis and compare April to May, things have further worsened and gone down. In our network, the enquiries are down by 75 percent and the retail sales have been impacted by almost down by 65 percent.”
Jain said, “The supply chains were already quite fragile, fractured and fragmented and during COVID 1.0 the nature of the lockdown was very different, was national level. Supply chains are very intricate, we are spread all across India, and with this COVID 2.0 what is happening is that every state is not synchronised so for us it becomes much more of a challenge to operate.”
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Maruti Suzuki6,878.10 -80.60
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Tata Motors330.65 -6.75 -2.00
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M&M769.45 -12.45 -1.59
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Maruti Suzuki6,878.10 -80.60 -1.16

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