COVID19 double whammies India’s light weight vehicle market; Sales to drop by 22-25% affecting aluminium consumption

The light vehicle market in India is estimated to see a drop in 2020, with sales falling 22-25 per cent, found two top global vehicle forecasting firms. This will be the highest decline among the top ten global markets, bringing India's position down below the top five.

India is estimated to lose its No.5 position to South Korea in 2020 as the automobile market remained less affected in Korea than in India due to the COVID19 pandemic.

India’s light vehicle production is likely to close at 3.2 million tonnes at the end of 2020, recording a decade low. Sales are anticipated to come in at 14.9 million units compared with 76.5 million units a year ago, according to HIS Markit. India lost almost three months of production or about 900,000 units than in 2019, said Gaurav Vangaal, IHS Markit’s associate director.

Nonetheless, Vangaal expects India to regain its fifth position in 2021.

India faced one of the strictest lockdowns in the world, resulting in the sales of carmakers fell by 42 per cent in the first quarter of 2020. This, in turn, also affected the consumption of aluminium products. Recovery started in August but could not offset the loss caused earlier in the year.

Ajay Kapur, CEO of Vedanta Aluminium, said the domestic Indian market has a long way to go to match the consumption of aluminium in global counterpart. In the domestic automotive sector, India’s aluminium consumption is only around 4 per cent compared to 11 per cent in the US and 14 per cent in Europe.

According to experts, the COVID19 pandemic was a double whammy for the light vehicle market as it disrupted both demand and supply chain.

In 2021, the market is expected to bounce back to double-digit growth on account of the low base of 2020. But to regain the previous peak, it will take two to three years more.