Auto shares skid as companies report zero domestic sales in April

Shares of automobile companies declined on Monday as many firms reported nil sales in the month of April after a nationwide lockdown kept factories and showrooms shut.


At 10:11 AM, the Nifty Auto index was down 7.33 per cent as compared to 5.1 per cent decline in the Nifty50 index.

Among individual stocks, Tata Motors plunged 12.6 per cent to Rs 81.50 on the NSE. Besides, TVS Motor, Maruti Suzuki India, Ashok Leyland, Bajaj Auto, Mahindra & Mahindra, and Hero MotoCorp fell in the range of 6-7 per cent. Eicher Motor declined 5.32 per cent.


Auto ancillary stocks also fell. Motherson Sumi crashed 12.27 per cent while Bharat Forge tumbled 11.78 per cent. Exide, Amara Raja Batteries, and Apollo Tyres fell in the range of 5-6 per cent. MRF slipped 3.15 per cent.


Maruti Suzuki India had zero sales in the domestic market, (including sales to OEM), in April 2020 as all production facilities were closed in compliance with the government orders.


Mahindra & Mahindra (M&M) announced that the company sold 733 vehicles in the export market during April 2020. Domestic sales of vehicles during the month was completely impacted by the ongoing Covid-19 pandemic and resulting national lockdown.


Two-wheeler major TVS Motor also posted zero sales in the domestic market for April although the company was able to export 8,134 two-wheelers and 1,506 three-wheelers, following resumption of operations at Chennai Port. 


Bajaj Auto, too, reported zero domestic sales in April. Exports of 2-wheelers fell 80 percent to 32,009 units while exports of commercial vehicles fell 81 percent to 5,869 units.


Notably, Tata Motors has already announced that it will stop reporting monthly wholesale numbers from April and, instead, report quarterly wholesale and retail numbers.


The worsening problem forced three industry bodies of carmakers, (SIAM), auto dealers (FADA) and auto component makers (ACMA) to make a joint representation to resume operations in all zones irrespective of red, orange and green. Their contention is that it is impossible to start manufacturing with partial reopening.


Analysts said that even after the lockdown ends, recovery for the sector will be very slow as the economic sentiment will be poor. “Given the early trends, we are yet not as sure of how the recovery will vary by region and by area Even if we recover from the coronavirus pandemic, the economic impact is bound to cause ripples for months to come. In addition, the severe hit to the tourism sector and fall in foreign remittances will potentially have an adverse effect on the economies,” analysts at Dolat Capital said.


Analysts feel that rural volume may outpace urban, as the lockdown will be extended in cities, which are the epicentre of the virus.