Coronavirus Update: March Car Sales Plummet, Government Relaxes Loan Repayments And Insurance Renewals

The count of COVID-19 cases across the globe is nearing 11 lakh and the virus has claimed nearly 60,000 lives. In India, automotive manufacturing is on a pause due to a government-imposed 21-day lockdown. While a complete lockdown could be lifted on April 14, how long will it be before the auto industry resurfaces? 

Car companies’ challenges post-lockdown include selling 10 per cent of the leftover BS4 stock domestically and exporting the remaining 90 per cent to other countries. Meanwhile, they also have to create demand for BS6 cars and meet that demand despite supply chain disruptions. To get a better grip on the latest movements in the industry, let’s look at what’s happened since our last update: 

EMI Moratorium: 

While some of us are working from home during the quarantine, the larger Indian workforce has experienced a loss of income opportunity. Government relief comes in the form of a moratorium on loan repayments. The Reserve Bank of India (RBI) had called for the moratorium and major Indian banks have complied. Some have pushed payments back by three months for all customers, while others will do so on demand. For a nuanced outlook, read our story where we’ve fleshed out the moratorium.

Some Motor Insurance Policy Renewals Can Be Deferred: 

A Union government notification has said that health and motor vehicle insurance policies which have expired or will expire during the lockdown period can be deferred until April 21. During this period, the insurance company will still give you cover. However, this relief is only applicable to third-party health and motor vehicle insurance. If you have a comprehensive policy, the concession doesn’t apply to you. For life insurance policies expiring during the lockdown, the Insurance Regulatory and Development Authority has allowed the grace period for renewal premiums to be extended by another 30 days.  

Car Sales Plummet In March: 

The demand for new cars in India plummeted last month. Car sales in March were 50 per cent less than the same month last year. For some manufacturers such as Volkswagen, the year-on-year decrease is as high as 95 per cent. To know which cars were the most popular and which carmakers are the worst hit by the crisis, read this story. 

Supply Chain Issues To Affect Automotive Component Manufacturing: 

The investment information and credit rating agency ICRA has released a new report summarising the impact of the coronavirus on the automotive components sector. It has said that the current slowdown in the Indian auto industry is the sharpest decline of the last two decades. The agency expects the trend to follow until the first quarter of 2021. In addition to the low domestic demand for new cars, exports will be reduced, ICRA says. Smaller automotive manufacturers will face significant pressure. Larger players will be helped by their financial flexibility and liquidity buffer. Capital expenditure is likely to be impacted as well. 

While the news smells worse now, COVID-19 cases haven’t relapsed in China even as the country gingerly resumes operations. India’s lockdown is likely to be relaxed come April 14 and we are halfway through. If it wasn’t clear before, ICRA’s report has reinforced that the effects of the pandemic will last well into 2021. If you want normalcy to arrive sooner, observe social distancing and self-isolate when unwell, at least until a vaccine becomes available in your state.