Car prices may be 'fairly stable' in short term; demand to rise from this month: VW India official
Car prices are likely to remain "fairly stable" in the short term, as the second wave of COVID-19 has more or less balanced the demand-supply situation in the past two months, according to a senior official at Volkswagen Passenger Cars India. Automakers saw declining sales in May and reversed the recovery path in the first three months of 2021, fueled by a backlog. Various states and authorities resorted to restrictions and lockdowns in April and May to contain the rising infections during the second wave of COVID-19.
With the COVID-19 situation improving and easing, overall demand in the economy is expected to pick up in the coming weeks.
With this in mind, Ashish Gupta, Brand Director of Volkswagen Passenger Cars India, said demand is expected to pick up again from June due to the easing of restrictions, increasing vaccinations and a normal monsoons.
In an email interaction, he said that demand in the first quarter of this calendar year actually exceeded supply, which in turn led to longer waiting times and upward price corrections in the market.
“Even for us at Volkswagen, we saw robust demand for all of our products in the first quarter of 2021, and we actually entered the lockdown with a strong book of outstanding customer orders,” he said.
Major automakers such as Maruti Suzuki, Hyundai, Mahindra & Mahindra, Tata Motors, and Toyota Kirloskar reported a year-over-year decline in domestic car sales in May. The second wave of COVID clearly has production and shipping.
“We are currently experiencing a decline in demand for cars due to the ongoing lockdown.
“Deliveries to customers in April were affected by 20 percent. Most of the country was locked in May, so shipments were down nearly 70 percent, ”Gupta said.
Although the second wave of COVID-19 was certainly a damper on deliveries to customers, he said, "We see that this situation has more or less balanced demand and supply, both of which are equally constrained due to the prevailing situation". .
This situation should lead to "fairly stable prices" in the short term, and demand is expected to pick up again when restrictions ease, he noted.
In May alone, India reported more than 88.82 lakh coronavirus infections.
Gupta said efforts have been made in the past two months to ensure the safety and wellbeing of employees in its factories and dealer networks.
Volkswagen India operates its plants with limited capacity.
Gupta sounded optimistic, saying the auto industry will pick up momentum once the lockdowns are eased and also as the holiday season approaches. "We will continue to see sales growth in the used car segment due to the need for personal mobility."
Speaking of the situation ahead of the second wave of COVID-19, he said that recovery trends in the auto industry were quite encouraging from the second half of 2020, with virtually all auto segments reporting a healthy sequential recovery.
The last quarter of March for car manufacturers was 43 percent above the previous year's figure and even 13 percent above the sales volume of the first quarter of 2019.
Volkswagen India's plans remain on schedule, according to Gupta, preparing for the launch of the most anticipated C-segment SUV, Taigun.
“Following our earlier commitment, the Taigun will hit the market with the new five-seat Tiguan this year around Christmas time,” he said, adding that quick vaccination schedules and lessons learned would help maintain a reasonable level of normalcy restore.
The company's used car business has done well over the past 18 months, and last year sales on this channel grew three times compared to over 10,000 cars.
"We're on track to double that in CY 2021," said Gupta.
Said electric vehicles are the way forward for the Volkswagen (VW) group globally, he said, "In India, we estimate the EV launch should happen around 2025-26, both due to the construction time required". Volume and the critical charging infrastructure. "
With a view to global trends, "we assume that, under the right conditions and a conducive environment, electric vehicles can account for up to 20 percent of the Indian car market by 2030," he emphasized.
Regarding India, he said, "We are assessing the market situation and infrastructure development across the country and will introduce the technology when the time is appropriate".
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