According to R C Bhargava, Chairman, Maruti Suzuki, the second wave of pandemic and rise in GST and other input costs are the major reasons for the low car demand in the first quarter of 2021. The largest carmaker in the country managed to sell only around 3.53 lakh units in Q1. R C Bhargava also mentioned a few other reasons for this decline in sales which well will discuss in detail. The Indian automobile industry is on the path to recovery from the aftermath of the second wave of the pandemic. But experts also say that the reason could be the pent-up demand from the time of lockdown. Let us discuss all these aspects in detail.
Reasons for low car demand
The effects of the second wave of the pandemic were utterly underestimated. The actual destruction shook one and all. No one was expecting another complete lockdown for a month. But it had to be done in order to ensure the safety of the citizens. However, it did leave its trace on the industry. All the production facilities were shut down completely as people were stuck at home again. On the other hand, after the lockdown ended, the carmakers had the giant task to fulfill the pent-up demand, introduce new models and continue with the business. That has resulted in a slight increase in the monthly sales, which is clear from the July sales figures as well. There are good chances that this trend could continue but we will have to wait for the third wave to pass first.
The priority of the Government and people should be to get fully vaccinated first. That seems to be the only way to curtail the extreme situation during the third way. We can’t make the mistake of underestimating the effects of the third wave like we did last time. We will have to be better prepared so that the negative impact on the healthcare and economy could be minimized, if not eliminated. These were some of the reasons for the low car demand in our market in the last quarter.
The carmakers are seeking some relief from the Government with things like relaxation in the GST to control the rising input costs and in turn, the prices of cars. The preference for personal mobility has increased as a result of the social distancing norms and this could also lead to an increase in car demand. Along with that, the hike in fuel prices has also promoted the use of alternate fuel-powered vehicles with hybrid and CNG powertrains.