Timid demand for two-wheelers, along with reduced disposable income from entry-level vehicle buyers, is expected to reduce domestic sales volume in FY22 on a year-on-year basis, India Ratings and Research said. (Ind-Ra).
Weak demand from the rural sector, as well as the postponement of the reopening of colleges and offices in the midst of the third wave of the pandemic should support this trend. As a result, Ind-Ra said domestic sales volume is expected to be flat or decline 4% year-on-year, compared to its earlier expectation of 12-15% growth.
“This would be exacerbated by loss of production due to semiconductor shortages, particularly in passenger (PV) vehicles,” he said.
“However, 4QFY22 is likely to be at or above 3QFY22 due to some easing of concerns over chip shortages and good harvest revenue, although this is likely to be offset by lower consumer sentiments amid the third wave of Covid.”
He pointed out that while the recovery of the domestic auto industry has been slow, exports showed healthy growth during 9MFY22 across all industry segments.
“The 2Ws, which account for around 80% of total exports, have seen improved demand from most export markets, including Latin America, Asia and Africa, and improved the share of Indian equipment manufacturers in the world.
“Exports also increased for PV and CV. The trend is expected to continue for the remainder of FY22, with sales volume remaining above 50% year-over-year growth.”
In addition, the decline in volume for automotive suppliers should be somewhat offset by the increase in the average selling price of vehicles. Additionally, automotive OEMs are unlikely to be significantly impacted due to their strong balance sheets and solid liquidity position.
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Posted: Saturday, January 22, 2022, 11:14 a.m. IST