Indian Passenger Car Market Analysis – 2020 (January – September)

Slowing GDP growth has caused massive de-growth of passenger car sales in 2019 (source). This have been compounded in 2020 by country wide lockdown, introduced, in late March 2020, to check the spread of Covid-19 induced pandemic. Strict lockdown has brought demand – supply system to near standstill in April 2020.

GDP in second quarter of 2020 crashed by 23.9%. Consequently passenger vehicles sales, too, has declined by 29% in 2020 (January-September), compared to same period last year.

1. Pent up demand describes a rapid increase in demand for a service or product, usually following a period of subdued spending

2. Consumers tend to hold off making purchases during a recession, building up a backlog of demand that is unleashed when signs of recovery emerge

3. Quite often, pent up demand accelerates the economic recovery period immediately following an economic downturn

Is a V-shaped recovery in sight? And can it sustain?

1. Wholesale volume is increasing sequentially with easing of lock down

2. Still it cannot be construed as full recovery, as average sales since April, is still much low – at 1,70,167 units

3. It seems demand backlog from April and May is getting fulfilled now

4. OEMs need to be little cautious over sustainability of pent up demand post festive season

5. Because extent of damage done by GDP crash in 2nd quarter of 2020, to unorganized sector, is still unknown

6. This may have cascading effect on growth recovery in coming years