Covid disruption: Consumer goods’ sales crash

Sales of automobiles, televisions, air-conditioners, smartphones, refrigerators and washing machines fell sharply in May, with the Covid second wave and the ensuing local lockdowns disrupting both production and retail channels, even as consumers cut back spending.Industry executives across sectors though expect June to see some recovery as states start easing lockdown restrictions and the tidal wave of infections recedes.While sales of TV sets, air-conditioners, refrigerators and washing machines in May plunged 65% over April, smartphone sales fell well over 30% sequentially to around 5.5-6 million units, as per multiple industry executives and market trackers.With a majority of auto retail outlets shut and production curtailed at manufacturing units, passenger vehicle makers dispatched about 103,000 units last month – nearly a third of the 286,728 vehicles sold in April 2021, as per industry estimates. Several leading manufacturers suspended operations to divert industrial oxygen for medical purposes, which also contributed to the sharp sales fall last month.‘10-15% White Goods Shops Open in May’Only 10-15% of white goods shops were open this May while footfalls in those stores were as low as 5-6% due to restricted store timings, said Kamal Nandi, president of apex industry body Consumer Electronics and Appliances Manufacturers Association (CEAMA). Several states had also restricted sales of non-essentials through ecommerce.The country’s largest carmaker Maruti Suzuki sold 32,903 units last month, nearly a quarter of the 135,879 units sold in April 2021. Homegrown auto majors Tata Motors and Mahindra & Mahindra (M&M) saw domestic sales plunge 40% and 56% on a month-on-month basis to 15,181 units and to 8,004 units, respectively."In May 2021, the company shut production from 1st May through 16th May so as to divert oxygen from industrial use for medical purposes," Maruti Suzuki said in a statement.Toyota Kirloskar Motor, which had announced a maintenance shutdown at its facilities at the end of April, sold 707 units last month, a 90% decrease over the previous month. "Last month witnessed no production at our plants in Bidadi as well as minimal sales owing to the much-needed restrictions & sporadic lockdowns in different parts of the country," said Naveen Soni, senior vice-president, Toyota Kirloskar.In the commercial vehicle segment, Tata Motors sold 9,371 units last month, down by more than a third sequentially, while Ashok Leyland sales plunged 66% over April.Tarun Pathak, research director at Counterpoint Research, said decline in both demand and supply led to a sharp fall in smartphone sales in May."Phone buying was surely not the priority of customers dealing with the deadly second wave and abstaining from venturing out. Meanwhile, manufacturing activity was also majorly disrupted because of worker health issues," he said.Most large handset factories in India including Foxconn, Wistron, Oppo, Vivo and Samsung had to curtail their production capacity by up to 50% this month due to labour shortage and to avoid building inventory amid demand slowdown.Rajeev Nair, senior analyst at research firm Strategy Analytics, said that online channels would account for over 55% share of all sales in the ongoing quarter as offline stores were the worst affected with consumer footfalls dropping sharply in malls and marketplaces.He expects smartphone sales at roughly 27 million in the current quarter through June, compared with some 38 million in the January-March quarter, with some demand picking up as the unlock activity starts in major states.CEAMA’s Nandi, who is also the business head at Godrej Appliances, also expects demand for consumer electronics products to pick up in June."June looks better than May even though several states have extended lockdowns, but restrictions are getting relaxed. But we expect the month will end with at least 75-80% of the market being open for sales with infection rates dropping down in most states," said Nandi.Automobile companies also expect a similar recovery trend this month and the quarter through August."With the cases coming down and gradual opening up of markets, we foresee strong demand rebound. We are working closely with our supplier partners to manage supply chain issues and meet the market demand," said Veejay Nakra, chief executive officer, (automotive division), M&M.Toyota Kirloskar Motor’s Soni added that the overall market situation as well as consumer sentiments are better than May 2020 and expects ‘pent-up demand’ and the demand for personal mobility to drive sales once the markets open.He pointed to the company’s "very healthy number of pending orders" and insignificant order cancellations. "However, we will be able to take a better stock of the situation once the restrictions are relaxed".Hemant Sikka, president (farm equipment sector) at M&M, said that the spread of Covid infection to the rural markets had led to stringent lockdowns, leading to deferment of tractor purchase and limited operations at dealerships."While state specific lockdowns and localised restrictions continue, it is heartening to see the Covid cases reducing sharply. This is leading to sharp improvement in farmer sentiments and green shoots of recovery are visible, especially since the last week, as farmers start preparing their land for upcoming Kharif crop season," he said.

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