Second Covid-19 wave may pose downside risk to domestic auto demand: Report

Second Covid-19 wave may pose downside risk to domestic auto demand: Report [ad_1]

The second wave of Covid-19 might pose downside dangers to the domestic auto trade demand within the close to time period, a report mentioned on Friday.

The demand for industrial autos (CVs) may revive within the second quarter of 2021-22 as financial actions enhance, and likewise due to the decrease capability within the system after consecutive double-digit decline in 2019-20 and 2020-21, India Ratings and Research (Ind-Ra) mentioned within the report.

Demand for CVs, notably medium and heavy CVs, is probably going to additionally profit from varied authorities initiatives to assist revive the economic system. However, the revival of the passenger service phase continues to be a while away, it mentioned.

The domestic automobile industry‘s gross sales quantity declined 14 per cent year-on-year (YoY) within the final fiscal yr with passenger and industrial car segments sale falling 2 per cent and 21 per cent respectively, whereas the two-wheelers quantity fell 13 per cent (YoY).

The decline in gross sales quantity is in step with Ind-Ra’s estimate of 14 -18 per cent decline for the yr, it mentioned.

For 2020-21, the total retail sales volume fell 34 per cent YoY led by 17 per cent drop in passenger car (PV) gross sales, 51 per cent fall in CV gross sales and 34 per cent drop in two-wheeler (2W) retail registrations, respectively, Ind-Ra mentioned.

Amid decrease discretionary purchases by shoppers, PVs remained the saving grace for the domestic retail market, it mentioned.

However, retail PV gross sales volumes grew 28 per cent in March 2021 over the year-ago interval whereas different segments similar to CVs, 3Ws, and 2Ws inform a quite grim story as retail gross sales declined 42 per cent, 51 per cent and 35 per cent YoY , respectively final month, mentioned the report.

The double-digit decline in retail gross sales throughout segments, besides PVs, in March 2021 signifies that shopper sentiment has not totally recovered, it mentioned, including Ind-Ra believes that the second wave of Covid-19 might pose downside dangers to the domestic auto trade demand within the close to time period.

According to the report, the domestic auto trade recorded optimistic development for the eighth consecutive month in March 2021. PV and 2W gross sales volumes have been up 115 per cent and 73 per cent YoY, respectively in March 2021, aided primarily by the low base of March 2020.

Export volumes additionally continued the expansion development in March 2021, up 57 per cent from March 2020, boosted by 63 per cent YoY development in 2W exports.

For 2020-21, the whole export volumes declined 13 per cent YoY with PV, CV, and 2W exports quantity falling 39 per cent, 17 per cent, and seven per cent YoY, respectively, Ind-Ra mentioned.

The PV phase has benefitted probably the most from the choice for private mobility, ensuing within the lowest decline amongst segments; additionally decrease than Ind-Ra’s expectation of a 5-8 per cent decline for 2020-21.

Segments similar to compact/tremendous compact and mini/micro have carried out higher than mid-sized/govt/premium vehicles and van segments, probably due to the next demand from first time patrons, it mentioned.

Also, the demand for utility autos continues unabated with the phase rising 12 per cent YoY in 2020-21 on the again of latest launches, mentioned the report.

While the 2W phase gained from a wholesome rural demand, elements similar to delays in opening up of instructional institutes, elevated value of possession due to worth hikes and rising gasoline costs coupled with lack of revenue due to the Covid-related lockdown resulted in a requirement contraction, particularly within the entry stage fashions.

The decline in 2W volumes was in step with Ind-Ra’s expectation of 13 -16 per cent in 2020-21, it mentioned.

CV demand noticed the much-needed traction in March quarter 2021, buoyed by a revival in building demand. Domestic CV wholesale quantity grew 43 per cent YoY within the quarter, boosted by 101 per cent YoY gross sales development of medium and heavy items carriers, Ind-Ra mentioned.

According to the report, gentle items carriers’ gross sales volumes have been up 42 per cent YoY. However, passenger service CVs gross sales volumes declined 55 per cent YoY in March quarter, as shoppers continued to keep away from public transport.

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