‘Last FY growth pressures helped by low base factor amid protracted FY21 lockdown’
‘Last FY growth pressures helped by low base factor amid protracted FY21 lockdown’
According to Acuite Ratings & Research, demand for passenger cars (PVs) will show moderate growth over the next few quarters with the economy fully unfolding and demand reviving, particularly in rural areas.
However, the agency said volumes may remain partially constrained due to ongoing semiconductor supply problems as well as sharp rises in retail fuel prices.
Domestic PV sales posted 14.7% growth in FY22, despite semiconductor supply issues causing longer wait times and production cuts for certain models, Acuite said in a statement.
Growth pressures were also supported by a low base factor amid the protracted FY21 lockdown, he added.
“Acuite believes that demand for PVs will show moderate growth over the next few quarters, with the economy fully opening up and demand reviving, particularly in rural areas,” it said.
For two-wheelers, the rating agency said demand in India has continued to be plagued by the ongoing COVID-19 pandemic and its impact on the informal sector and small businesses.
“While we expect demand to return in FY23 on easing economic conditions and expectations of healthy agricultural production, the timeframe for this is uncertain and may also be impacted by sharply rising retail fuel prices,” he added.
In the commercial vehicle (CV) segment, domestic sales grew 25.2% year over year in FY22, according to Acuite. This was mainly due to the recovery in demand in the second half of the fiscal year, led by a revival in industrial activity, a rise in trade volumes and higher public investment in infrastructure despite the COVID surges.
“Improving resume demand will continue as the economy opens up and the government’s focus on developing infrastructure and expanding national highways in the country,” said Suman Chowdhury, chief analytical officer of Acuite Ratings & Research.
However, Mr Chowdhury said the sharp rise in retail fuel prices due to the current geopolitical scenario could put pressure on transport companies’ margins and affect new vehicle purchases in the short term.
