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The passenger vehicle (PV) segment is expected to record a month-on month increase in sales volume during June 2021, said India Ratings and Research.

"As the manufacturing activities at most of the OEM plants have resumed, Ind-Ra expects the industry, and the PV segment in particular, to record a month-on month increase in sales volume in June 2021," the agency said in its auto monitor report for May.

According to Ind-Ra, widespread and severe business impact of the second Covid wave in May led to further deterioration in sales.

"Major PV and 2W original equipment manufacturers (OEMs) advanced maintenance shutdowns to May and undertook plant shutdown for 10 to 14 days, amid state-wise lockdown related restrictions as well as dampening consumer sentiment," the ratings agency said.

"Majority of the automotive dealerships have either closed or have limited their operations, limiting clearance of the existing inventory. Also, supply-side constraints due to localised lockdowns in several states for almost the entire month have affected sales," it added.

Accordingly, the domestic automobile industry's sales volume declined 65 per cent MoM in May 2021 despite of a lower base, following a 30 per cent MoM fall in April 2021, which was also impacted by lockdowns, albeit in the key states and towards the latter part of the month.

"The PV and two-wheeler sales declined by 66 per cent and 65 per cent MoM, respectively, in May 2021," Ind-Ra said.

"Domestic three-wheeler demand was almost wiped out with a decline of 91 per cent MoM amid a further reduction in preference for shared mobility," it added.

However, the growth trend in exports volumes was also disrupted in May, with volumes declining by 16 per cent MoM.

Besides, the total production, excluding CVs, decreased 57 per cent MoM due to a 58 per cent MoM decline in the production levels of PVs and two-wheelers in May 2021.

Retail sales also declined in May with PV and two-wheeler volumes declining 59 per cent and 52 per cent MoM, respectively, reflecting further deterioration in consumer sentiments and continued closure or limited operations of majority of the dealerships.

"Ind-Ra expects sales for June to witness healthy growth compared to May, aided by the pent-up demand with the gradual lifting of localised lockdown restrictions along with reopening of manufacturing facilities of OEMs and a steady decline in daily new Covid cases," the rating agency said.