Car prices are likely to remain “relatively stable” in the short term as the second Covid-19 wave has more or less balanced the supply-demand situation in the last two months, according to a senior Indian official for Volkswagen Passenger Cars in India.
Motorists saw a drop in sales in May and reversed their recovery path in the first three months of 2021, driven by oversupply. Different states and authorities used restrictions and blockades in April and May to stop rising infections in the second wave of Covid-19.
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As the Covid-19 situation improves and stagnates, overall demand for the economy is expected to increase in the coming weeks.
Faced with this circumstance, Ashish Gupta, India’s brand director for Volkswagen Passenger Cars, said the demand is expected to bounce back from June to ease restrictions, increase vaccination and get a normal monsoon.
In an email interaction, he told PTI that the demand actually exceeded supply in the first quarter of this calendar year, which in turn would lead to longer waits and correcting rising prices in the Marketplace.
“For us at Volkswagen, too, the first Q of 2021 saw strong demand for all of our products and we really got into the locks with a strong order book of excellent customer demand,” he said.
Major automotive manufacturers like Maruti Suzuki, Hyundai, Mahindra and Mahindra, Tata Motors and Toyota Kirloskar have reported a drop in passenger home vehicle sales during May to April. The second wave of Covid has significant production and shipments.
“Currently, we are experiencing a decline in passenger vehicle demand as a result of the ongoing shutdown.
“Shipments to customers in April had a 20 percent impact. In May, most of the country was blocked, so we saw deliveries dropping by about 70 percent,” Gupta said.
Although the second wave of Covid-19 has been to slow the pace of shipments to customers, he said, “we see that this situation has more or less balanced demand and supply, both of which are equally reduced as a result of the prevailing situation.”
This situation is expected to lead to “relatively stable prices” in the short term, and demand is expected to begin to pick up again when restrictions begin to decline.
In May alone, India reported more than 88.82 lakh coronavirus infections.
Gupta said efforts have been made over the past two months to ensure the safety and well-being of workers in factories and vendor networks.
Volkswagen India operates its plants with limited capacity.
Looking optimistic, Gupta said the car industry will gain strength even when the blockades are eased and the holiday season approaches. “We will continue to see this growth in sales, as well as the need for personal mobility in the used car segment.”
Regarding the situation prior to the second wave of Covid-19, the trends in the auto industry that achieved recovery were quite encouraging since the second half of 2020, when almost all segments of the automotive industry provided a healthy sequential recovery.
Volumes of passenger car manufacturers in the last quarter of March were 43% higher year-on-year and 13% higher than the sales volume of the first quarter of 2019.
Gupta said Volkswagen India’s plans are on schedule and that it is preparing to market the most promising C-segment Taigun SUV.
“Under the previous commitment, the new Taigun 5-seater Tiguan will be launched during the festive season this year,” they said, adding that quick vaccination plans and current experiences will help return to a reasonable level of normalcy. …
The company-owned car business has performed well over the past 18 months and last year, sales of that channel tripled compared to more than 10,000 cars.
“We are on track to double this in 2021,” Gupta said.
They said electric vehicles are the way to go for the Volkswagen (VW) team around the world, saying: “In India, according to our estimates, vehicle takeover should reach around 2025-26, both of which will take time to build. Volumes and critical cargo infrastructure.”
Looking at global trends, “we expect that with the right conditions and enabling environment, vehicles can make up to 20 per cent of India’s passenger car market by 2030,” he stressed.
As for India, he said “we are evaluating the development of the market and infrastructure across the country and we will introduce the technology at the right time.”
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