After an uptick in volumes during March indicating there may still be appetite left in the market for newly assembled cars and one which provided a breather after a duller than ever February, auto volumes are down once again in April; and predictably so. Keeping shutters down on their factories for weeks at end every month since May-22, automakers are facing one of the worst storms ever, probably even worse than the pandemic. There is no end to the ongoing input supply shortage, a direct consequence of what seems to be an unending economic crisis necessitating harsh restrictions on imports.

Volumes for passenger cars, LCVs and SUVs stood at roughly 110,000 units in 10MFY23; sliced in half compared to last year’s 10M period. The biggest decline is witnessed amongst pickups where volumes plummeted 74 percent, while passenger cars dropped 54 percent. Jeeps and SUVs seem fairly shielded and it seems assemblers have had enough inventories to serve the SUV market that has grown substantially since the introduction of so many new models over the past two years. Other segments have not been as fortunate.

Perhaps, if inventories were replenished, one would be better able to gauge the demand in the market which should be restrained. Not only have cars become pricier, and fuel prices have gone up, the cost of borrowing is also prohibitively high with banks more vigilant about advancing loans to risky assets. With declining purchasing power and stagnant incomes, potential auto loan borrowers are becoming riskier, even if they were to approach a bank for an auto loan willing to pay the higher interest rate. But demand dynamics will play out for certain when import restrictions completely ease which seems less and less likely in the near term as government’s priorities seem less inclined toward fixing the economic woes of the country. Honda’s recent announcement however indicates that there may be some recovery in the company’s accessibility to CKD supplies which would restore production to a degree—the company will resume operations after having plants shut for nearly two months. This will give a breather, maybe but recuperate the auto market, surely not.