In the fiscal year that began on April 1, sales of cars, sport utility vehicles (SUVs), motorbikes and trucks have already fallen 75% from a year ago to about 1.5 million vehicles, data released by the Society of Indian Automobile Manufacturers (SIAM) showed.
That compares with a peak of more than 26 million units in the fiscal year 2018-19 before a slowdown in consumer demand last year pushed auto sales 18% lower to 21.5 million.
"The impact of COVID-19 is going to be very harsh on the auto industry. As of now, we are staring into a very deep slowdown," Rajan Wadhera, president of SIAM, told reporters.
"We don't see the situation becoming normal - reaching 2018 volumes - for another 3-4 years," he said.
India went into lockdown in late March to prevent the spread of the novel coronavirus, forcing automakers to suspend manufacturing. While production has resumed, with restrictions, plant utilisation levels are low at 20%-30%.
They are expected to rise to 40% this month, Wadhera said, but supply chains are still disrupted and some cities are facing fresh lockdown restrictions as cases of the novel coronavirus continue to rise.
The southern state of Karnataka, home to Toyota Motor Corp's car plant, went into a week-long lockdown starting Tuesday, forcing the Japanese automaker to temporarily halt production.
Wadhera said there was some pent up demand for cars, but momentum could be lost unless the government acts to boost demand. SIAM is lobbying for a tax cut on auto sales and a scheme to incentivise the scrapping of old vehicles, he said.
(Reporting by Aditi Shah in New Delhi and Chandini Monnappa in Bengaluru; Editing by Bernard Orr, Sherry Jacob-Phillips and Barbara Lewis)
By Aditi Shah and Chandini Monnappa