Domestic Auto sales likely to drop by 25 per cent in financial year 2020-21: MG Motor India

The entire auto industry had registered low sales in the financial year (FY) 2019-20. Now, with the start of the new financial year, Rajeev Chaba, President and Managing Director, MG Motor India, believes that the auto sales could drop by up to 25 per cent as compared to the already low base of the previous year. Speaking to the media, the top official of MG Motor issued a statement in view of the lockdown due to the coronavirus (COVID-19) pandemic. 

Speaking to PTI, Rajeev Chaba said, “The worst case, as I see for the industry, is may be a 25 per cent decline this year...the best case probably is 11 per cent down.” It is believed that the industry will be down by at least 40 to 50 per cent in the months of April, May and June as the cases of the coronavirus infection will be at its peak. As per the top official from MG, from July things are likely to improve and the economy will start limping back to normal. At this point, it will be harder to generate demand as most consumers may not be in the right frame of mind and are not going to buy things like a car. 

Rajeev Chaba believes that at this point government support will be needed and stated, “Here I think the government may have to move into the next mode. Also, along with that the industry as well as government have to do something on demand stimulation so that the customers are coming to a better frame of mind and they move on to new phase of their lives.”  Hopeful of the festive season, he staetd, “Hopefully, we have come out of, the majority of the issues are over, still the virus would be there and precautions, everybody has to keep. That's the new normal. I think by festival time we would at least come back to the last year level but last year was already low base for the industry. At that low base we can come equal for the industry.' 

According to industry body SIAM, as of March 31, total vehicle sales across categories in India were down 17.96 percent at 2,15,48,494 units as against 2,62,66,179 units in 2018-19. Similarly, passenger vehicle sales were also down by 17.82 percent at 27,75,679 units in FY20 as against 33,77,389 units in FY19. 

Hoping that by 2021 things will be better for the industry, Chaba said,'I think it should start taking off from January February onwards next year. So this is how I see it.'

On steps taken by the company to endure the impact of the health crisis, Chaba said, 'We are calibrating our business. We are doing a lot of planning and forecasting what can be the various scenarios of the market in the next nine months to 12 months. Accordingly, we need to have a new cost structure in place so that we can survive.'

He, however, asserted that 'even in that worst case, we have given a pledge to our employees that we will not release or will not do a single job cut. All employees are safe in our company, because that's also part of community.'