Auto sector in focus: Commercial and private vehicles to drive growth this fiscal, 2-wheelers, tractors to remain sluggish - Report
CV and PV volume could grow 18 and 12 per cent, respectively, this fiscal after rising 26 and 13 per cent, respectively, last fiscal, the report said.
On the back of multiple triggers including softening of semiconductor issue, government’s spend on infrastructure, the commercial and private vehicles will continue to drive recovery in India’s auto sector volume in the current fiscal, a rating agency firm CRISIL Limited said in is report.
CV and PV volume could grow 18 and 12 per cent, respectively, this fiscal after rising 26 and 13 per cent, respectively, last fiscal, the report said, noting that the two-wheelers will see a modest sales growth, while tractor volume growth is expected to be flat or in the low single-digit this fiscal.
According to Pushan Sharma, Director, CRISIL Research, “CV demand growth, particularly for medium and heavy commercial vehicles (MHCVs), is expected to be backed by replacement demand amid improved utilisation and profitability of fleet operators, and government spending on infra.
Similarly, light CVs will be propelled by a surge in e-commerce and better last-mile connectivity, while demand for buses will be driven by the gradual reopening of schools and offices and easing of mobility restrictions, Sharma said.
Meanwhile, PV volume will be driven by the easing of chip shortages, particularly in the second half, as capacity additions by chip manufacturers come onstream, helping clear the sizeable order backlog built over the past six months, the director at CRISIL Ratings said.
Besides, inventory build-up from the current low of 15-20 days to the normative levels of 30-35 days will account for about a third of the incremental volume in the PV segment, he added.
On the other hand, the two-wheelers sales are expected to register a modest recovery after falling for three successive fiscals, led by the opening up of educational institutes and improved mobility. and, the tractor segment will be bogged down by the high-base effect.
Another Director at CRISIL Ratings, Naveen Vaidyanathan expects higher volume and easing commodity prices in the second half to soften the pressure on the profitability of original equipment manufacturers (OEMs) this fiscal.
Strong balance sheets and modest debt have helped OEMs buttress the impact of profitability pressures and sustain their credit profiles in the recent past, Vaidyanathan further said.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.